According to the joint secretary, Ministry of Electronics and Information Technology, the terms of the production-linked incentive (PLI) scheme for information technology (IT) hardware need to be re-evaluated in light of rising graphics processing unit (GPU) costs and the emergence of artificial intelligence (AI) servers. GPU costs now contribute almost 90 per cent of the cost of servers, up from 70 per cent earlier, as users migrate to AI servers, which still hold significant potential for domestic value addition
The scheme provides incentives based on incremental turnover or net sales of manufactured goods. He said this structure needs to be revised if up to 90 per cent of component costs are not manufactured locally, noting that commercial high-performance GPUs are not produced in India.
The first PLI scheme for IT hardware was notified in 2021, while the second iteration, currently in place, was notified in 2023 to build a robust domestic manufacturing ecosystem for hardware including laptops, tablets, and servers.
