India’s Production-Linked Incentive (PLI) scheme for IT hardware is reshaping the global manufacturing landscape by positioning India as a preferred hub for laptop production. As global tensions between the United States and China intensify, major international brands like HP, Asus, and MSI are strategically shifting their production lines to India to reduce dependence on Chinese supply chains.

Why Global Brands Are Turning to India

The PLI scheme offers financial incentives of up to 5% on net incremental sales of locally manufactured devices over six years. With a budget allocation of ₹17,000 crore (US$ 2 billion), this initiative provides a major competitive advantage to brands manufacturing in India.

Brands benefit not only from financial support but also from eligibility to participate in lucrative government tenders that require 20-50% local content. This has led to a surge in investments from global Original Equipment Manufacturers (OEMs) and their Indian partners.

Boost in Domestic Manufacturing Capacity

Currently, India’s domestic laptop production stands at ₹8,517 crore (US$ 1 billion), contributing to 10-20% of the nation’s total laptop demand, which amounts to ₹93,687 crore (US$ 11 billion) in FY24. While this still leaves a gap in terms of complete self-reliance, the trend shows strong potential for further reduction in imports as more brands join the initiative.

Global Brands Making Strategic Moves in India

• Asus, the Taiwanese electronics major, recently partnered with VVDN Technologies to launch an assembly line in Manesar, Haryana. The facility can produce one laptop every 240 seconds, demonstrating high-volume production efficiency.

• MSI, another major player, has tied up with Gurugram-based Syrma SGS for local production. This not only reduces cost but also enables MSI to localise components and adapt faster to domestic market needs.

• Dixon Technologies, one of India’s largest contract manufacturers, is investing over ₹1,000 crore (US$ 117 million) in a new manufacturing facility in Tamil Nadu. This unit will manufacture laptops for HP, and the company has also signed agreements to manufacture laptops for Lenovo and Asus at the same site.

These partnerships highlight a multi-brand commitment to India’s evolving manufacturing capabilities and its growing significance in global supply chains.

PLI 2.0: The Next Big Push for IT Hardware

The second phase of the PLI scheme, launched on May 29, 2023, is specifically designed for IT hardware, including laptops, tablets, and servers. With ₹17,000 crore set aside for this phase, it aims to:

• Drive large-scale manufacturing of IT devices.

• Support value addition and component ecosystem development.

• Make India a global electronics hub.

The average incentive of 5% on incremental sales makes this an attractive opportunity for companies willing to scale up production within Indian territory.

Geopolitical Context and Its Impact

The move aligns with the global ‘China Plus One’ strategy, where companies are reducing their reliance on China amid geopolitical uncertainties. India, with its:

• Skilled labour force

• Improving infrastructure

• Supportive policy environment

...is emerging as a natural alternative to China.

The ongoing US-China trade war has only accelerated this transition. Brands previously centered in China are now fast-tracking plans to diversify their manufacturing bases to de-risk operations and align with friendly market economies.

Role of Local Partnerships in Ecosystem Building

The success of this shift relies heavily on the strength of India’s local partners. Companies like VVDN, Syrma SGS, and Dixon Technologies bring:

• Expertise in electronics manufacturing

• Established infrastructure

• Compliance with PLI norms and quality standards

These companies are not only acting as enablers but also becoming integral to the supply chain of major global brands.

PLI Impact Beyond Laptops

Though this article focuses on laptops, the implications of the PLI scheme extend far beyond. The government’s broader vision includes:

• Smartphones and tablets

• Networking equipment

• Semiconductors and related hardware

This points to India’s long-term ambition to become a tech hardware superpower. The push is complemented by other government initiatives like:

• Make in India

• Digital India

• Startup India

Conclusion: India’s Strategic Advantage

India’s PLI-backed manufacturing ecosystem is gradually carving a global identity. With major OEMs establishing local production units, India is no longer just an export market but a production destination. The convergence of economic policy, geopolitical timing, and corporate strategy is turning India into a formidable electronics powerhouse.

If the current momentum continues, India could soon significantly reduce laptop imports, increase employment, and build a self-sustaining electronics ecosystem. As more global players join the PLI bandwagon, the future of laptop manufacturing in India looks both promising and impactful.

The Upcoming IPOs in this week and coming weeks are Tankup Engineers.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.