GS Paper III

News Excerpt:

India boosts hi-tech manufacturing grants approval to 27 global and local IT hardware companies under the Production Linked Incentive (PLI) scheme.

About the News:

• The upgraded Rs 17,000 crore PLI scheme encourages domestic production of Personal Computers, Laptops, and Tablets.
• 95% of the approved companies are ready to start manufacturing immediately, investing Rs 3,000 crore.
• The earlier version of the scheme had instituted incentives of up to 2 % of net sales of domestically manufactured goods. The current version raises the basic incentive level to over 5 %.

About the PLI scheme:

• It is a form of performance-linked incentive to give companies incentives on incremental sales from products manufactured in domestic units.
• It is aimed at boosting the manufacturing sector and to reduce imports.
• Make in India and 'Atmanirbhar Bharat' slogans drive the government's push for PLI.
• The objective is to incentivise foreign manufacturers to start production in India and domestic manufacturers to expand their production and source material domestically.
• If sourced from abroad, they need to be from "Trusted sources", which means procuring from regions beyond China.

Benefits:

• India's Global Manufacturing Ambition: This sets India on the way to becoming a global hub for hi-tech manufacturing, especially in manufacturing hardware.
• Reducing Dependency on China: With over 80% of laptops currently sourced from China, the government emphasizes decreasing reliance on China for laptop manufacturing and components.
• Economic Impact: These policy incentives will help boost GDP growth and tax revenues. It is also expected to attract a good amount of  Foreign Direct Investment (FDI) in the IT hardware sector.
• Employment Generation: The increased investments would lead to an estimated total employment of 2 lakh people, with 50,000 in direct employment and 1.5 lakh indirectly employed.

Challenges:

• Delays in implementing the scheme can hinder its impact.
• Bureaucratic hurdles can slow down the disbursement of incentives.
• Global events, such as pandemics or geopolitical tensions, can disrupt the supply chain.
• Inadequate infrastructure, including transportation and logistics, can pose challenges.

Way Forward:

The approval of 27 companies under the upgraded Rs 17,000 crore PLI scheme is a crucial and right step in India's hi-tech manufacturing ambition. To ensure sustained success, continued support for local production, fostering collaboration between industry and academia, innovation, and providing targeted incentives for R&D and global competitiveness are essential.