Published: March 24, 2026
Category: Technology / Policy
The Government of India is set to revise its Production-Linked Incentive (PLI) 2.0 scheme for IT hardware, as soaring graphics processing unit (GPU) prices and rapid advancements in artificial intelligence (AI) server technology reshape the industry.
The move reflects growing concerns that the current incentive structure may no longer align with the realities of modern AI infrastructure, where GPUs have become both essential and increasingly expensive.
Why the Change Is Needed
The PLI 2.0 scheme was originally designed to boost domestic manufacturing of IT hardware such as laptops, servers, and related components. However, the explosive demand for AI has significantly increased reliance on high-performance GPUs, which are key components for AI training and inference.
With global demand surging, companies like Nvidia and AMD have seen their AI-focused chips become more expensive and harder to procure. This has made it difficult for manufacturers in India to meet production targets under the current scheme.
Shift Toward AI Server Ecosystems
The government is now expected to adjust the scheme to better support AI server manufacturing, advanced computing infrastructure, and the integration of next-generation chips and accelerators.
This marks a shift from traditional IT hardware toward AI-driven systems, which require significantly more investment and specialized components.
Industry Impact
The revision could provide greater flexibility in incentive structures, encourage companies to invest in AI-ready infrastructure, and help India stay competitive in the global AI race.
It may also attract more global tech firms to expand manufacturing operations within India, aligning with the country’s broader “Make in India” strategy.
The Bigger Picture
As AI adoption accelerates worldwide, nations are racing to secure their position in the semiconductor and AI hardware supply chain. By reworking PLI 2.0, the Government of India aims to ensure its policies keep pace with technological shifts and market realities.
The update signals a clear recognition that AI infrastructure, not just traditional hardware, will define the future of digital economies.
Author.Adigun Adedoye.