India’s IT Sector: Regional Hubs, Approved PLI Beneficiaries for Hardware Production

Posted by Written by Yashoda Kapur Reading Time: 8 minutes

We look at the latest developments boosting the investment viability of India’s IT sector, including push for local hardware manufacturing under the PLI scheme and 5G trials, besides spotlighting regional hubs.

India is an information technology hub, and the IT sector employs 3.9 million, making it the largest private sector jobs creator in the country. The country spends US$1.6 billion annually on training its IT workforce.

IT industry hubs in India

India’s IT clusters are located in the states of Andhra Pradesh, Karnataka, Maharashtra, New Delhi, Tamil Nadu, and Telangana.

The following list includes some of the major IT multinational companies (MNCs) located in key states:

  • Andhra Pradesh – Accenture, Baan, IBM, Infosys, Microsoft, Motorola, Oracle, and Wipro
  • Karnataka – Capgemini, Mindtree, Oracle, Sony, Tata Consultancy Services (TCS), Texas Instruments, and Wipro
  • Maharashtra – Capgemini, Infosys, TATA, TCS, Tech Mahindra, and Wipro
  • New Delhi – Accenture, Adobe India, HCL, IBM, Infosys, Oracle, TCS, Tech Mahindra, and Wipro
  • Tamil Nadu – Accenture, HCL, HP, Infosys, TCS, and Wipro
  • Telangana – Accenture, HCL, HP, Infosys, TCS, and Wipro

Top IT investment destinations by state

Andhra Pradesh

Andhra Pradesh has three dedicated special economic zones (SEZs) for the IT industry in the districts of Visakhapatnam, Kakinada, and Nakkapalli. The state is also home to over 20 percent of India’s IT manufacturers – creating an ecosystem favorable to IT services companies as well. By 2020, Andhra Pradesh was expected to attract US$6.4 billion in new foreign investments.

The Andhra Pradesh IT sector to benefit from:

  • 20 Electronics Manufacturing Clusters (EMCs) – to come across the state in order to create infrastructure suitable for the sector.
  • Information Technology and Investment Region (ITIR) – Visakhapatnam to be established as major electronics hub in the state; the government plans to build 20 new EMCs and a new IT park.
  • Electronic hardware park – to be set up in Kakinada with state-of-the-art infrastructure.
  • Electronics bazaars to facilitate G2B/B2B/B2G/B2C interactions – to come up at Visakhapatnam, Vijayawada, and Tirupati.

Under the India Business Process Outsourcing Promotion Scheme (IBPS) launched by the central government, Andhra Pradesh has created 12,234 new jobs, according to data collected by the Software Technology Parks of India (STPI). The IBPS facilitates the expansion of IT and BPO companies in Tier-2 and Tier-3 cities across India.


Karnataka houses the fourth largest technology cluster, which includes over 3,500 companies that contribute to over US$32 billion in exports. The sector provides direct employment to one million and creates indirect jobs for three million IT professionals. By 2020, Karnataka was expected to become the largest IT cluster globally.


Since 2016-17, the Maharashtra state government has aided in the development of 37 IT parks and approved 472 others. In addition, Maharashtra’s state industrial policy offers incentives for investments to be made in various infrastructure, such as new knowledge parks.

In 2015-16, Maharashtra had devised a separate policy entirely for the IT industry, with its impact being fairly successful.

Its most important achievements were the provision of incentives for the building of new IT parks and Business Process Outsourcing (BPO) units in the state’s rural and semi-urban areas, provision of 10 different fiscal incentives (entry tax, property tax, electricity tariff, electricity duty exemption, etc.) for the promotion of animation, visual effects, gaming, and comics (AVGC), promotion of the Entrepreneurship, Innovation and IT Incubation Facility, and provisions for the promotion of Green IT, which refers to IT that is environmentally conscious.

During 2017 to 2020, the policy successfully attracted new investments worth over US$700 million for IT, and over US$113 million for IT-enabled services (ITeS). Exports were worth US$107.8 billion in 2015-16, growing by nine percent from the preceding year, and contributing nearly 83 percent to the total export revenues earned. The revenue earned from the total exports of the industry rose to US$129.5 billion, from US$118.8 billion in 2014-15.

Mumbai has the largest number of ISP (internet service provider) companies.

New Delhi

New Delhi is another hub for IT hardware companies, such as Barco Electronic Systems Pvt Ltd, Bharat IT Services Ltd, Intex Technologies India Ltd, Harmonic India Pvt Ltd, HCL, Samsung India Electonics pvt Ltd, Toshiba India Pvt Ltd etc. Besides this, several IT SEZs have been established in the city’s adjacent suburban districts of Noida (Uttar Pradesh) and Gurugram/Gurgaon (Haryana), which make up part of the National Capital Territory region.

Tamil Nadu

Tamil Nadu’s capital Chennai houses 1,780 IT units that employ over 400,000 IT professionals. As of today, Tamil Nadu has 16 operational SEZs, such as Cognizant Technology Solutions India Pvt. Ltd., Coimbatore Hitech Infrastructure Pvt. Ltd., DLF Info City Chennai Ltd. and the Electronics Corporation of Tamil Nadu Limited (ELCOT). The state government offers capital subsidies to invite investments into the industry. Tamil Nadu has a major role to play in India’s IT exports, by contributing over 10 percent to the country’s total exports.

Tamil Nadu follows Andhra Pradesh for the highest number of new jobs created under the India Business Process Outsourcing Promotion Scheme – 9,401.


Telangana’s contributions to the Indian IT industry are matched by its over 1,500 IT companies, that in turn aid the state in contributing 10 percent to the country’s overall IT exports. Telangana’s capital Hyderabad is responsible for providing the second largest contributions to the total revenues, that come from these overall IT exports.

Production-Linked Incentive scheme for IT hardware

The Production-Linked Incentive (PLI) Scheme for IT Hardware aims to boost India’s manufacturing capacity for laptops, tablets, all-in-one PCs, and servers, as well as attract greater foreign investment. Foreign investors with a registered company in India are eligible to participate under this scheme.

Applicants had to register by April 30, 2021, to seek access to PLI benefits (for detailed guidelines, download the document released by the Ministry of Electronics and Information Technology here). Information on the scheme is available on the MEITY website in English, Spanish, French, German, Hebrew, Korean, Japanese, Mandarin, and Traditional-Chinese:

It has been reported that, as of the deadline, 19 companies had applied.

The PLI scheme, worth US$10 billion, is expected to boost local hardware manufacturing, besides attracting greater foreign investment as the local ecosystem becomes more sophisticated.

Target segments

The government wanted very specific types of companies to participate under its PLI scheme for IT hardware. Below we list the scheme’s target segments.

Category A: IT hardware companies

  • Consolidated global manufacturing revenue of the applicant (including its group companies) in the base year should be greater than US$6 billion for the target segment or greater than US$1 billion for electronics hardware products/sub-assemblies/components.

Category B: Domestic companies

  • Consolidated global manufacturing revenue of the applicant (including its group companies) in the base year should be greater than US$1 million for the target segment or greater than US$2 million for electronics hardware products/sub-assemblies/components.

Eligibility shall be subject to thresholds of incremental investment and net incremental sales of manufactured goods (covered under the target segment) over the base year as defined.

PLI beneficiaries in IT hardware

The government on July 1, 2021 said 14 companies, including Dell, Lava, Dixon, Wistron, and Foxconn, have been approved as beneficiaries under the Production Linked Incentive (PLI) Scheme for IT hardware.

Over the next four years, these companies are expected to fuel a total production worth over INR 1.61 trillion (US$15.57 billion), and generate direct employment opportunities for over 36,000 people.

Beneficiaries under ‘IT hardware companies’ category proposed production worth INR Rs 847.46 billion (US$11.38 billion). The approved companies under the ‘domestic companies’ category have proposed production worth INR 760.07 billion (US$10.20 billion).

As per the government, the PLI scheme will bring additional investment in IT hardware manufacturing to the tune of INR 25.17 billion (338.04 million) and domestic value addition is expected to grow from the current 10-15 percent to 25-30 percent.

Approved IT hardware companies

Four companies were selected under the category IT hardware companies, which include Dell, ICT (Wistron), Flextronics, and Rising Stars Hi-Tech (Foxconn).

Approved domestic companies

Under the category of domestic companies, proposals from 10 firms were approved – Lava International Ltd, Dixon Technologies (India) Ltd, Infopower Technologies (JV of Sahasra and MiTAC), Bhagwati (Micromax), Neolync, Optiemus, Netweb, Smile Electronics, VVDN, and Panache Digilife.

PLI applicants

In total, the following companies, including two of Apple’s contract manufacturers had applied to avail incentives under the PLI scheme as of April 30, 2021 – Coconics, India; Dell, US; Dixon, India; Flextronics, US (Singaporean-domiciled); HLBS, India; Infopower, India; Lava, India; Micromax, India; Neolync, India; Netweb, India; Optiemus, India; Panache Digilife, India; Smile Electronics, India; RDP Workstations, India; VVDN, headquartered in India and US; Foxconn, Taiwan and Wistron, Taiwan (Apple’s contract manufacturers). Only 14 applicants were approved in the notification announced July 1, 2021.

India’s IT industry growth drivers

The Indian IT industry is home to over 17,000 IT firms, of which 1,000 are large firms located across 50 destinations in India. The industry is home to the second largest number of tech start-ups in the world, benefits from the second highest number of internet subscribers in the world, and the largest market share in the global services sourcing industry.

FDI rules and expenditure trends

India allows 100 percent FDI in business and management consultancy services, data processing, computer consultancy services, market research services, and technical testing services under the automatic route.

In addition, India also allows 100 percent FDI in B2B (business-to-business) e-commerce to garner foreign capital to grow its IT software and hardware capabilities. Since April 2000 to March 2021, India has received FDI worth US$71.05 billion in computer software and hardware.

  • Expenditure of US$1.6 billion on skill development and research and development (R&D).
  • Digital India Campaign – a plan worth US$20 billion to spread mobile connectivity across India.
  • Artificial Intelligence (AI) – investments in advanced technological capabilities that will enable the IT industry to be worth US$7 billion by 2030 due to accelerated demand across most sectors.

In 2020, the IT industry accounted for eight percent of the country’s GDP and the employment of 138,000 new persons. The IT industry is the largest contributor to India’s total exports. By 2021, exports are expected to be worth US$150 billion. As of 2020, India is a preferred destination for IT, by being a leader in the global sourcing industry, having 52 percent market share in global services exports. By 2025, the entire industry is projected to be worth US$100 billion.

Investment trends

The core competencies and strengths of India’s IT sector have attracted a significant amount of FDI. Between April 2000 to September 2020, India attracted a total of US$62.47 billion, and was ranked second in receiving FDI inflow by the Department for Promotion of Industry and Internal Trade (DPIIT).

The following are some of the latest developments in the industry:

  • In February 2020, Microsoft India announced a partnership with Intel to introduce a new hyper-converged infrastructure (HCI) solution named ‘’Azure Stack’’ HCI to the Indian market for the purpose of empowering its organizations with advanced hybrid cloud capabilities.
  • In February 2021, HCL Technologies announced a global strategic partnership with Alteryx Inc., a pioneer in analytical process automation, in order to help businesses around the world meet their goals of analytical automation and digital transformation.
  • In March 2021, Tech Mahindra announced a partnership with UK-based company Enate specializing in robotic process orchestration solutions, with a workforce management platform that will help streamline operations between human employees and technologies, such as AI technologies.

Initiatives of the government

Notable initiatives undertaken by the Indian government for the development of the IT industry include:

  • In 2020, ‘’Simplified Other Service Provider’’ (OSP) guidelines were released in order to improve the ease of doing business in the industry.
  • In the Union Budget of 2021, the Finance Ministry allocated US$7.31 billion towards the IT and telecommunications industries.
  • The Department of Telecommunications, Government of India and the Ministry of Telecommunications, Government of Japan have signed a memorandum of understanding (MoU) for the purpose of enhancing cooperation in the areas of telecommunications security, 5G technologies, and submarine optical fiber cable system.

5G trials in India

Amid prevailing geopolitical tensions, Chinese vendors Huawei and ZTE have not been allowed to participate in India’s 5G trials.

The government made amendments to the Access Service Licenses stating that after June 15, 2021, equipment will be procured only from ‘trusted sources’ that have been approved by a designated authority. The National Cyber Security Coordinator is the designated authority for the job.

A list of these trusted sources have yet to be prepared by the Indian government, but it is indicative that India will discourage the procuring of Chinese equipment.

These 5G trials are an ambitious precursor to the 5G auctions that may begin either late this year, or early 2022. Currently, the Department of Telecommunications (DoT) has given permission to mobile operators Airtel, Idea, MTNL, Reliance, and Vodafone to begin the trials. These mobile operators have mentioned that they will partner with Finland’s Nokia, South Korea’s Samsung, and Sweden’s Ericsson for the purpose of conducting the trials.

In addition to enabling real-life testing of 5G devices and handsets, these trials will also test applications in India’s socially relevant sectors, such as health, education, and agriculture.

Jio, India’s largest 4G network, plans to participate using its indigenous technology. Reliance Industries has commented that Jio will collaborate with US chipmaker Qualcomm technologies for the purpose of locally manufacturing the critical equipment. Currently, Jio has already developed an end-to-end 5G stack that includes 5G radio and core network solutions, thus enabling a self-sufficient and cost-effective rollout. Additionally, last year Qualcomm invested US$97 million in Jio.

Previously, both companies had partnered to come up with an ‘’open and interoperable’’ interface architecture, with a virtualized Radio Access Network (RAN) based on 5G solutions.

Qualcomm has also joined hands with Bharti Airtel for the purpose of 5G roll-out. Under this partnership, Airtel will utilize Qualcomm’s 5G RAN platforms to roll-out virtualized and open-RAN 5G networks in India.

At the moment Jio is also working with Original Equipment Manufacturers (OEM) companies to standardize 5G device configurations.

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