Hp's expansion of manufacturing in india: pli scheme & growth potential

Hewlett-Packard (HP), a market leader in the PC space in India, is making significant strides to strengthen its manufacturing presence in the country. The company has formally applied for participation in the Production Linked Incentive scheme 0 (PLI 0) and is looking to expand its manufacturing operations to include consumer PCs within India. With over 30% market share in the Indian PC market for 2022, HP's move highlights its commitment to the Indian market and its recognition of the country's potential for growth in the IT sector.

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The PLI Scheme and HP's Manufacturing Investment

The PLI scheme for IT hardware manufacturing was first announced in May 2021 with the aim of establishing India as a global manufacturing hub for laptops and tablets. The scheme offers incentives to both global and Indian IT hardware manufacturers to increase their participation in the global value chain of electronics. However, there was a significant gap between the targets and actual investments under the initial PLI scheme, leading to the launch of PLI 0 with a higher budget outlay of Rs 17,000 Crore in collaboration with the industry.

Under the PLI 0, HP is expected to invest between Rs 250-300 crore for manufacturing in India. The company has been manufacturing a range of commercial laptops, desktops, All-in-One (AIO) PCs, and workstations in the country since 200In 2020, HP consolidated its manufacturing operations and shifted them to Chennai contract manufacturer Flex's facility. With its participation in the PLI 0, HP aims to further expand its manufacturing capabilities in India and meet the growing demand for PCs in the country.

Challenges and Opportunities

While the PLI 0 presents an opportunity for HP and other PC manufacturers to strengthen their manufacturing presence in India, there are challenges that need to be addressed. The government has imposed restrictions on importing IT hardware, requiring OEMs to apply for licenses before import. This move is intended to promote local manufacturing and value addition. However, it may result in a temporary demand-supply gap and increased prices for existing hardware in the short term.

Additionally, the ecosystem for manufacturing printed circuit boards (PCBs) in India is not yet fully developed, posing a challenge for companies like HP. Setting up facilities for PC manufacturing and creating a viable ecosystem will take time and resources. Most companies will incur losses in the short term, in addition to capital expenditure, to manufacture hardware in India. This could lead to a price hike of around Rs 2,000 to Rs 4,000 for a mid-range PC locally manufactured in the country.

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The Future of HP's Manufacturing in India

Despite the challenges, HP remains committed to India's digital transformation journey and sees the country as a dynamic growth market. The company recognizes the potential of the PLI scheme in boosting IT hardware manufacturing and is excited about the possibilities ahead. HP's participation in the PLI 0 demonstrates its long-standing partnership with India and its dedication to meeting the evolving needs of Indian consumers.

In conclusion, HP's manufacturing operations in India have been significant, and the company's participation in the PLI 0 further strengthens its commitment to the Indian market. While there are challenges to overcome, HP is optimistic about the future of PC manufacturing in India and the opportunities it presents for growth and innovation.

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