IT hardware manufacturers flag PLI investment clause; cite demand issues

Foxconn, HP, and Dixon Technologies have requested the government drop the proposed requirement of fresh investments in order to avail of the production-linked incentive (PLI) scheme being prepared for the industry, The Economic Times (ET) has reported.

The IT manufacturers have said that they have underutilised capacities that first need to be used up before they can commit to further expansion. They added that the capacity expansion does not make sense as global PC and tablet sales have been steadily declining.

Earlier in a meeting of officials from the ministry of electronics and information technology (MeitY), they had insisted on including the investment clause. They reasoned that it ought to be done to maintain consistency in the PLI scheme for other categories. The officials sought assurances from the industry to meet the proposed targets, ET reported, quoting people aware of the development.

The companies attending the meeting included Foxconn subsidiary Bharat FIH, HP, Dixon Technologies, Infopower Technologies, Bhagwati Products (Micromax), the Manufacturers Association of Information Technology (MAIT), and the India Cellular and Electronics Association (ICEA).

An executive familiar with the discussions between the government and the industry said that 80 per cent of the discussions have been finalised. He also said that the government finds it difficult to give IT manufacturers a concession since the PLI scheme for all other domains is attached to production capacity expansion.