Yet Another PLI Success: Dixon Secures Lenovo's Laptop Manufacturing Deal After Xiaomi's Smartphone Contract

Several months after the Modi government's approval of a revised production-linked incentive (PLI) for IT hardware, Chinese giant Lenovo has decided to outsource its laptop and notebook manufacturing to Padget Electronics.

Padget is a subsidiary of the home-grown contract manufacturing giant, Dixon.

Dixon, which recently entered into a contract manufacturing agreement for smartphones with Chinese phone giant Xiaomi, stated that the new deal will bolster the Indian government's Make in India initiative and provide a boost to local Indian manufacturers.

“It gives us immense pleasure to partner Lenovo for manufacturing of IT Hardware products under the IT hardware PLI 2.0 Scheme. This will give a strong impetus to India’s manufacturing competitiveness,” Atul B Lall, Vice Chairman & MD of Dixon Technologies, was quoted as saying by Times of India.

“Lenovo will bring in the global know-how and processes to manufacture IT hardware products. We are delighted and encouraged by the trust Lenovo has reposed on Dixon and believe that this association will leverage our excellence, and execution track record. It represents a major milestone in the government’s ‘Make in India’ initiative," he added.

The government had on 18 November approved the name of 27 companies, including global makers such as Dell, HP, Foxconn, and Lenovo, apart from local players such as Optiemus, Padget and VVDN, under the upgraded Rs 17,000 crore PLI scheme for IT hardware.

The move comes as India tries to emulate the success it has achieved in smartphone manufacturing, where companies ranging from Apple and Samsung to Oppo and Vivo have started making products within India

The government is keen on India becoming a major player in the IT hardware manufacturing sector and has introduced policy incentives and encouragement programs to firmly establish the country as a worldwide centre for high-tech production.

“A total of 27 companies have been approved under the IT hardware PLI scheme. About 95 per cent of these... 23 companies are ready to start manufacturing from day-zero," Minister for Electronics and IT Ashwini Vaishnaw had said recently.

"This will set us up for being a big force in manufacturing of PCs, servers, laptops, and tablets,” the Minister had said, adding that the 27 companies will put in Rs 3,000 crore as incremental investments.

The government, which initially had proposed a license scheme for laptop imports before doing away with the plan, is now pushing the companies to increasingly make locally, and also source components from India or other ‘trusted’ locations.

Dixon stated that the agreement would also be beneficial to local suppliers.

“Lenovo, which is a global leading player in their field, are known for their affordable — yet technologically advanced — products. We are confident that this partnership will also scale up localization and help create a component ecosystem and employment opportunities,” Lall said.

The government's persistent push to stimulate domestic laptop production is primarily due to the significant dependence of companies on China for either fully-assembled units or individual components.

“The government is categorical in its insistence that companies either start manufacturing here, or else start respecting the ‘trusted source’ norm, which means procuring from regions beyond China,” an official in the IT and Electronics Ministry was quoted as saying in the ToI report.

Currently, more than 80 per cent of laptops are sourced from China, with only some supplies coming from countries like Vietnam.

The majority of components are also procured from China, which is a concern for the government that is fervently promoting the 'Make in India' and 'Atmanirbhar Bharat' (self-reliant India) initiatives globally.

The government's enthusiasm for this cause has led to a significant increase in the incentives under the IT Hardware PLI scheme, from the initially allocated Rs 7,300 crore to a substantial Rs 17,000 crore.