India IT Hardware PLI Scheme Review: GPU Price Impact

India’s Production Linked Incentive (PLI) scheme for IT hardware is under review due to the escalating costs of Graphics Processing Units (GPUs) and the emergence of AI server technology, according to a senior government official. This re-evaluation could reshape incentives for manufacturers.

The current PLI 2.0 scheme, designed to boost local manufacturing, may not align with the cost structure of AI servers, where GPUs can constitute up to 90% of the total server cost. The government is engaging with industry stakeholders to explore alternative incentive mechanisms that better reflect the cost dynamics of AI-focused hardware.

“With GPUs now making up a significant portion of server expenses, the existing incentive structure, which focuses on domestic manufacturing, might not be the most effective approach for AI servers,” the official stated. The discussions aim to recalibrate the scheme to support the evolving technological landscape and ensure continued investment in India’s IT hardware sector.

The policy revision reflects the government’s adaptive approach to supporting high-tech manufacturing, acknowledging the rapid changes in component pricing and technological advancements. The revised PLI scheme is expected to be more attuned to the needs of AI server manufacturing, potentially attracting further investment in this critical area.

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