Companies commit over Rs 200 crore to expand IT hardware manufacturing under PLI scheme

Companies commit over Rs 200 crore to expand IT hardware manufacturing under PLI scheme, Telecom News, ET Telecom


New Delhi: Homegrown electronics makers such as Dixon Technologies, Infopower Technologies, VVDN and Bhagwati Products (Micromax) have committed more than Rs 200 crore to expand IT hardware manufacturing capacity under the government’s production-linked incentive (PLI) scheme.

The Rs 7,350-crore incentive scheme – notified in March – stretches over a four-year period from April 2021 to March 2025.

Dixon, the largest Indian electronics products manufacturer, is setting up its 13th factory in Noida, Uttar Pradesh, for laptops and tablets, which is expected to start production in the next four months.

Infopower Technologies, VVDN, and Bhagwati Products – the maker of Micromax mobiles – are expanding existing facilities for all four product lines – laptops, tablets, personal computers, and all-in-one servers.

Bengaluru-based Smile Electronics is expected to operationalize its new plant in Hindupur, Andhra Pradesh, by the end of the fiscal year.

The Ministry of Electronics and IT earlier this month approved four global companies – Dell, ICT (Wistron), Flextronics and Rising Stars Hi-Tech (Foxconn) – as well as 10 domestic companies – Lava, Dixon, Infopower, Bhagwati, Neolync, Optiemus, Netweb, Smile Electronics, VVDN and Panache Digilife – under the scheme.

As per the scheme’s guidelines, domestic players must invest Rs 20 crore and achieve incremental sales of Rs 50 crore in the first year, Rs 100 crore in the second, Rs 200 crore in the third and Rs 300 crore in the final year to qualify for incentives of 1%-4% on incremental sales over the base year – FY19-20.

“We have set aside an investment of Rs 25 crore over four years, of which Rs 10 crore will be spent in the first year in our new facility which will have a capacity of producing 500,000 laptops and 2.5 million tablets in a year,” Sunil Vachani, executive chairman of Dixon told ET. “We are estimating employment generation for 2,000 people by the second year.”

According to sources, Dixon is in advanced talks to close a manufacturing order for Acer laptops. Vachani did not comment, and Acer did not respond to ET’s emailed queries on the subject.

Infopower Technologies, a joint venture between India’s Sahasra group and Taiwan’s MiTac Holdings, will invest Rs 20 crore over the four-year period of the scheme.

“Our focus is on multinationals who want to enter the India market…we will be supporting their needs for domestic demand and exports,” said Amrit Manwani, chairman of Sahasra. “Our expansion will create close to 500 jobs including those in design, engineering and R&D.”

Networking products maker VVDN has earmarked Rs 100 crore under the scheme to expand its existing facility in Manesar, Haryana where it will hire close to 1,000 people.

“We are aiming to achieve revenues of Rs 1,000 crore annually over the next four years in this category,” Jeetender Singh, chief financial officer of VVDN told ET. “We are already making smart door-bell tablets for a foreign brand and are in active talks for servers and PCs.”

Bhagwati Products plans to invest close to Rs 50 crore and is in active talks with multiple international brands for laptops and tablets, which are expected to be announced within a month, said director Rajesh Agarwal.

Smile Electronics is planning to invest Rs 10-15 crore over the next 9-12 months initially for enterprise servers due to the large addressable market for servers in India, said Ashita Gupta, its chief operating officer. “We are also in talks with multiple brands for producing laptops and tablets,” Gupta added.

Despite a more than three-month delay in disbursing final approval letters under the PLI scheme, Indian companies are confident of achieving their first-year targets.

“The government has set a very realistic target for the domestic batch, both in terms of revenue and investment thresholds, and I am very confident it is achievable if we are able to mitigate the pandemic-related risks,” Agarwal said.

The industry has urged the government to increase the financial outlay of the scheme and redefine the low incentive structure. Manufacturers say they are optimistic that the government will increase the allocation once significant progress is made in output.

“Given the fact that the ecosystem for IT hardware manufacturing is absent in India, the scheme is definitely a good start, we are hopeful that higher incentives will flow in after gauging the success of the programme,” VVDN’s Singh said.





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