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Governance Structure: Manufacturing Electronics & IT Hardware in India

Governance Structure: Manufacturing Electronics & IT Hardware in India

Electronics industry is the world’s largest and fastest growing industry and is increasingly finding applications in all sectors of the economy. The Government of India attaches high priority to electronics hardware manufacturing and it is one of the important pillars of both “Make in India” and “Digital India” programmes.

The domestic production of electronics hardware has increased substantially from Rs. 1,90,366 crore (USD 29 billion) in 2014-15 to Rs. 5,33,550 crore (USD 75.7 billion) in 2019-20 at a Compound Annual Growth Rate (CAGR) of 23%. India’s share in global electronics manufacturing has grown from 1.3% in 2012 to 3.6% in 2019, as per industry estimates.

According to IDC, the market size for laptops in India was approximately 75 lakh (7.5 million) units in 2019-20 valued at Rs. 33,950 crore (USD 4.85 billion). Similarly, the market size for tablets was around 24 lakh (2.4 million) units, valued at Rs. 3,500 crore (USD 0.5 billion). The server market stood at 2 lakh (0.2 million) units valued at Rs. 9,100 crore (USD 1.3 billion).

With the domestic demand for electronics hardware expected to rise rapidly to approximately Rs. 26,00,000 crore (USD 400 billion) by 2025, India cannot afford to bear the rapidly increasing foreign exchange outgo on account of import of electronics.

The Government has been actively working to create a conducive environment for electronics manufacturing and offer incentives to attract large investments into the electronics manufacturing sector.

Government Schemes for Electronics Manufacturing in India

  • Initiatives like Make in India, Digital India and Startup India have given the much-needed thrust to the Electronics System Design and Manufacturing (ESDM) sector in India. Moreover, the government’s endeavors such as Modified Special Incentive Scheme (M-SIPS), Electronics Manufacturing Clusters, Electronics Development Fund and National Policy on Electronics 2019 (NPE 2019) have been a huge success.
  • As a result, India has shown remarkable progress in the sector, India’s production of electronics has increased from USD 29 billion in 2014 to USD 70 billion in 2019. From a country that had only two mobile phone manufacturing facilities in 2014, India now stands as the second-largest mobile phone manufacturer in the world.

To further strengthen the ESDM ecosystem with a complete value chain and position India as the global hub for ESDM, the following schemes have been notified by the Ministry of Electronics and Information Technology (MeitY):

  • Production Linked Incentive Scheme (PLI)
  • Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)
  • Modified Electronics Manufacturing Clusters Scheme (EMC 2.0)

Production Linked Incentive (PLI) Scheme

The Production Linked Incentive Scheme (PLI) for IT Hardware proposes a financial incentive to boost domestic manufacturing and attract large investments in the value chain. Production Linked Incentive Scheme (PLI) for IT Hardware was notified on March 3, 2021.

This Scheme extends an incentive of 4% to 2%/ 1% on net incremental sales (over base year of FY2019-20) of goods under target segments that are manufactured in India to eligible companies, for a period of four years (FY2021-22 to FY2024-25). The target IT hardware segments under the Scheme include Laptops, Tablets, All-in-One Personal Computers (PCs) and Servers. Incentives are applicable under the scheme from April 1, 2021.

In order to boost electronics manufacturing in the country and incentivize large investments in the electronics value chain, PLI Scheme for IT Hardware was notified on March 3, 2021. Over the next 4 years, the 14 approved companies under the Scheme are expected to lead to total production of about Rs. 1,60,000 crore.

Out of the total production of Rs. 1,60,000 crore in the next 4 years, more than 37% is expected to be contributed by exports of the order of Rs. 60,000 crore. The scheme is expected to bring an additional investment in electronics manufacturing to the tune of Rs. 2,500 crore. Generation of 36,066 additional direct jobs and three times indirect employment is expected under the PLI Scheme for IT Hardware.

Target segments

The government wanted very specific types of companies to participate under its PLI scheme for IT hardware. Below we list the scheme’s target segments.

Category A: IT hardware companies

Consolidated global manufacturing revenue of the applicant (including its group companies) in the base year should be greater than US$6 billion for the target segment or greater than US$1 billion for electronics hardware products/sub-assemblies/components.

Category B: Domestic companies

Consolidated global manufacturing revenue of the applicant (including its group companies) in the base year should be greater than US$1 million for the target segment or greater than US$2 million for electronics hardware products/sub-assemblies/components.

PLI beneficiaries in IT hardware

The government on July 1, 2021 said 14 companies, including Dell, Lava, Dixon, Wistron, and Foxconn, have been approved as beneficiaries under the Production Linked Incentive (PLI) Scheme for IT hardware.

Over the next four years, these companies are expected to fuel a total production worth over Rs. 1.61 trillion (US$15.57 billion), and generate direct employment opportunities for over 36,000 people.

Beneficiaries under ‘IT hardware companies’ category proposed production worth Rs. 847.46 billion (US$11.38 billion). The approved companies under the ‘domestic companies’ category have proposed production worth Rs. 760.07 billion (US$10.20 billion).

As per the government, the PLI scheme will bring additional investment in IT hardware manufacturing to the tune of Rs. 25.17 billion (338.04 million) and domestic value addition is expected to grow from the current 10-15% to 25-30%.

Eligibility criteria

Eligibility under the Scheme is subject to thresholds of Incremental Investment and Net Incremental Sales of Manufactured Goods (covered under the Target Segment) as defined. Accordingly, a baseline for Investment and Net Sales of Manufactured Goods will have to be established to determine eligibility and compute incentive amount due.

  • Manufacturers can claim the subsidy by submitting reports and documentation to MeitY showing the progress and results of their project. The subsidy will be paid out in installments based on achieving certain milestones.
  • It is vital for manufacturers to carefully review the eligibility criteria for the PLI scheme before applying to ensure that they meet all of the requirements. Manufacturers that do not meet the eligibility criteria will not be able to participate in the program and receive subsidies.
  • Under the PLI scheme, manufacturers can receive subsidies based on their performance in meeting certain milestones or targets. These milestones may include increasing production, achieving certain levels of domestic value addition, and exporting a certain percentage of production. The exact amount of benefits that a manufacturer can receive will depend on the specific terms of the PLI agreement, which will be outlined in the Letter of Intent (LoI) provided by the Ministry of Electronics and Information Technology (MeitY).
Eligibility Threshold Criteria

Approved IT hardware companies

Four companies were selected under the category IT hardware companies, which include Dell, ICT (Wistron), Flextronics, and Rising Stars Hi-Tech (Foxconn).

Approved domestic companies

Under the category of domestic companies, proposals from 10 firms were approved – Lava International Ltd, Dixon Technologies (India) Ltd, Infopower Technologies (JV of Sahasra and MiTAC), Bhagwati (Micromax), Neolync, Optiemus, Netweb, Smile Electronics, VVDN, and Panache Digilife.

PLI applicants

In total, the following companies, including two of Apple’s contract manufacturers had applied to avail incentives under the PLI scheme as of April 30, 2021 – Coconics, India; Dell, US; Dixon, India; Flextronics, US (Singaporean-domiciled); HLBS, India; Infopower, India; Lava, India; Micromax, India; Neolync, India; Netweb, India; Optiemus, India; Panache Digilife, India; Smile Electronics, India; RDP Workstations, India; VVDN, headquartered in India and US; Foxconn, Taiwan and Wistron, Taiwan (Apple’s contract manufacturers). Only 14 applicants were approved in the notification announced July 1, 2021.

Incentive Outlay

Total Incentive: The expected annual incentive outlay and cumulative incentive outlay under the Scheme is as follows:

Incentive Per Company: The incentive per company will be applicable on net incremental sales of manufactured goods (covered under the Target Segment) over base year subject to indicative ceilings.

Expected Annual Ceiling on Net Incremental Sales of Manufactured Goods Per Company on which
Incentive shall be applicable.

How to apply under the scheme to receive subsidies


  • Submission of Application – Applicant
  • Prima Facie Examination – Project Management Agency (PMA)
  • Letter of Acknowledgement issued – PMA        
  • Letter of Acknowledgement to be issued within 15 working days post completion of examination
  • Application Appraisal – PMA
  • Application Approval (based on decision of Empowered Committee and Competent Authority) – PMA
    • Letter of Approval to be issued within 5 working days of approval from Competent  Authority.


  • Submission of Documents to PMA – Applicant
  • Determination of Baseline (within 30 working days from submission) – PMA


  • Submission of Claim for Disbursement of Incentive – Applicant
  • Verification of Eligibility and Assessment of Incentive – PMA
  • Approval of Disbursement Claim (based on decision of Empowered Committee and Competent Authority) – PMA
  • Disbursement of Funds – PMA     

Way Forward

The government will soon launch a new production-linked incentive (PLI) scheme aimed at supporting manufacturers of IT hardware and computer servers, Minister of State for Electronics and Information Technology Rajeev Chandrasekhar said on January 10, 2023 in 36th International Conference on VLSI Design and the 22nd International Conference on Embedded Systems in Hyderabad.

The scheme will provide additional incentives for manufacturers and original equipment manufacturers (OEMs) who incorporate Indian-designed IP into their systems and products.

“With increasing digitalisation around the world, there has been an increase in the demand for products as well as talent. The supply chains are also being redesigned around concepts of trust and innovation and not on lines of price and efficiency as was done earlier. These are exciting times for all professionals connected to these sectors,” the minister said.

The centre is focusing on boosting semiconductor and electronics manufacturing with an aim to grow India’s share in the $3 trillion global electronics industry.

The ministry of electronics and IT (MeitY) has previously announced a nearly $10 billion PLI scheme to encourage semiconductor and display manufacturing in the country. It aims to have domestic electronics hardware manufacturing worth $300 billion and $120 billion in exports by 2026.

Vaibhavi Pingale

Ms. Vaibhavi Pingale is a Visiting Faculty of Economics at Gokhale Institute of Politics and Economics, Pune & at Savitribai Phule Pune University. She is pursuing her PhD. She has been actively writing media articles other than academic research.

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