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Local PC production in India triples as brands push for PLI, government contracts
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Hardware manufacturers in India have scaled up manufacturing of PC products significantly in the past year. According to analysts and industry reports, the volume of PCs manufactured in India has grown by three to four times in the past year, though most of this growth is still in assembly of PCs.
According to Jash Shah, a research analyst at Canalys, 18% of all PCs sold in India in the first quarter of 2022 were manufactured locally as compared to a low single digit figure a year ago which was mostly driven by tablets. In its quarterly report for the quarter ended March 2022, published today, Canalys said that India shipped 5.8 million units of PCs in the first three months of the year.
Navkendar Singh, research director at IDC India, said that the share of locally produced laptops was 4-5% a year ago, which has now increased to up to 10-12%. Singh further said that the share of locally made branded desktops has grown to 60-70%.
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That said, unlike the mobile phone manufacturing industry, PC manufacturing remains in the assembly segment. Which means that 90% of components used in making PCs are still imported from overseas, which will keep India dependent on countries like China at least for the time being.
The analysts attributed the growth in local manufacturing to the ₹7,325 crore production linked incentive (PLI) scheme for manufacture of IT hardware, which was approved by the Union Cabinet in February 2021. The scheme provides for manufacturing of laptops, tablets, PCs and servers in the country.
Since the PLI announcement, several PC brands including HP, Lenovo, and Acer have announced plans to expand local manufacturing in the last one year. These companies are ramping up local manufacturing efforts in order to meet the pandemic-fueled demand for laptops in India, and also to qualify for large government contracts, which require over 50% of the supplied devices to be manufactured in India.
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In August 2021, Lenovo said that it will expand its in-house PC manufacturing plant in Puducherry to focus on PCs and notebooks. The company bagged several large government contracts in Q3 2021 and surpassed HP to become the leading PC vendor in India, according to a report by Canalys at the time.
Lenovo isn’t the only one either. In November 2021, Acer announced that it will start laptop manufacturing in India at the Noida factory owned by Dixon Technologies, a homegrown manufacturing player. A month later, HP announced that it will manufacture laptops, desktops and All-in-One (AIO) PCs in India at the Sriperumbudur, Tamil Nadu facility of its manufacturing partner Flex Ltd. Prior to this HP was only making select models of its commercial desktop PCs in India.
According to IDC’s Singh, the share of locally manufactured PCs will continue to grow this year. However, he added that demand may start to taper off, especially for consumer laptops. Commercial demand will drive the market, especially large government projects in the education sector.
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