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MeitY invites applications for PLI 2.0 for IT hardware; introduces penalty for falling short of manufacturing targets
PLI 2
Image: Mohammadreza alidoost via Unsplash

MeitY invites applications for PLI 2.0 for IT hardware; introduces penalty for falling short of manufacturing targets

| @indiablooms | 30 May 2023, 10:06 pm

New Delhi: The Production-Linked Incentive (PLI) Scheme 2.0 for IT Hardware has been approved by the Union Cabinet with a budgetary outlay of Rs 17,000 crore.

The scheme will promote large scale manufacturing in laptops, tablets, all-in-one PCs, servers and Ultra Small Form Factor (USFF) devices and contribute significantly to achieve electronics manufacturing turnover of approximately $300 billion by 2025-26.

The scheme is expected to lead to total production of about Rs 3.35 lakh crore, bring an additional investment of Rs 2,430 crore in electronics manufacturing and will lead to the generation of 75,000 additional direct jobs, the Ministry of Electronics & IT (MeitY) said on Tuesday.

In a gazette notification, MeitY said the applicants of the existing PLI Scheme, who have not claimed any incentive, will be allowed to participate in PLI 2.0 Scheme as new entrants, provided they are selected.

The tenure of the second version of the scheme will be six years.

Applicants of the existing PLI scheme, who want to claim incentives for the first and second year, can also participate in PLI 2.0 scheme from the next year for which incentive is not claimed provided they are selected.

In such cases, their investment done during the tenure of the existing PLI Scheme will be considered an eligible investment under the PLI 2.0 Scheme.

The implementation of the Production Linked Incentive Scheme - 2.0 for IT Hardware will be carried out by a designated Nodal Agency.

IFCI Ltd has been selected as the Project Management Agency (PMA) for the current PLI Scheme for IT Hardware, as per the gazette notification.

The PMA will be responsible for providing secretarial, managerial, and implementation support, as well as fulfilling other assigned responsibilities as directed by MeitY.

The notification also stated that electronics manufacturing companies will have the opportunity to apply for incentives in advance, even if their production in the country begins up to two years later, specifically from April 1, 2025.

The application window will open on July 1 for a duration of 45 days, with the possibility of extending the timeline at a later stage.

“The incentive per company shall be applicable on net incremental sales of manufactured goods (covered under the Target Segment) over base year subject to a ceiling of Rs 4,500 crore for Global companies, Rs 2,250 crore for Hybrid (Global/Domestic) companies and Rs 500 crore for Domestic companies,” the gazette notification read.

PLI 2.0 has also introduced a penalty of 5-10 percent for companies that fall short of their declared manufacturing goals.

“The estimated PLI amount provided by the applicant for an individual year will act as a ceiling. To keep projection discipline in the scheme, there will be a provision for a penalty of 5% from the payable PLI amount if the actual PLI amount for a year is less by 25%-50% and a penalty of 10% if the shortfall is more than 50% from the estimated PLI amount given by the applicant at the time of application,” it stated.

The Empowered Group of Secretaries will monitor and review the overall progress of the PLI 2.0 Scheme, the notification said.

Through the PLI 2.0 scheme, the government has set a target to triple India's electronics manufacturing industry from its current value of $105 billion to over $300 billion. This significant growth is envisioned to render subsidies unnecessary in the electronics sector, and the industry has the potential to eventually reach a trillion dollars, thereby competing with China's electronics manufacturing sector.

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