electronics-incentive-schemes-launched-summary

Context: Three schemes approved earlier, with a ₹48,000-crore outlay, to boost large-scale manufacturing of electronics in the country have been launched by the Ministry of Electronics and Information Technology recently.

The three schemes are - 

  1. Production Linked Incentive (outlay of nearly ₹41,000 crore), 
  2. Component Manufacturing Scheme (about ₹3,300 crore) and 
  3. Modified Electronics Manufacturing Clusters (about ₹3,800 crore).

Production Linked Incentive(PLI) Scheme:

  • Under the Production Linked Incentive (PLI), which is targeted at mobile phone manufacturing and specified electronic components, the government initially plans to incentivise 10 firms - five global and five local.
  • The PLI Scheme shall extend an incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India and covered under the target segments, to eligible companies, for a period of five years subsequent to the base year.

Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS): 

  • The SPECS shall provide financial incentive of 25% on capital expenditure for the identified list of electronic goods, i.e., electronic components, semiconductor/ display fabrication units, Assembly, Test, Marking and Packaging (ATMP) units, specialized sub-assemblies and capital goods for manufacture of aforesaid goods. 

Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme:

  • The EMC 2.0 shall provide support for creation of world class infrastructure along with common facilities and amenities, including Ready Built Factory (RBF) sheds / Plug and Play facilities for attracting major global electronics manufacturers, along with their supply chains.

Significance:

  • The schemes will help in building a robust manufacturing ecosystem which will be an asset to the global economy and developing a strong ecosystem across the value chain and integrating it with global value chains.
  • The Schemes will help offset the disability for domestic electronics manufacturing and hence, strengthen the electronics manufacturing ecosystem in the country. 
  • The three Schemes together will enable domestic supply chain of components and state-of-the-art infrastructure and common facilities for large anchor units and their supply chain partners. 
  • These Schemes shall contribute significantly to achieving a USD 1 Trillion digital economy and a USD 5 Trillion GDP by 2025.
  • The three new Schemes are expected to attract substantial investments, increase production of mobile phones and their parts/ components to around Rs.10,00,000 crore by 2025 and generate around 5 lakh direct and 15 lakh indirect jobs.
  • Employment generation: With the three new schemes, the government aims to manufacture electronics worth ₹8 lakh crore, while generating employment for about 10 lakh people in the next five years.

Background:

Promotion of electronics manufacturing has been a key component of the Make in India program. 

  • With efforts such as the National Policy on Electronics, 2019, Modified Special Incentive Scheme (MSIPS), Electronics Manufacturing Clusters and Electronics Development Fund etc, India's production of electronics grew from USD 29 billion in 2014 to USD 70 billion in 2019. 
  • The growth in mobile phone manufacturing in particular has been remarkable during this period. 
    • From just 2 mobile phone factories in 2014, India now has become the 2nd largest mobile phone producer in the world.  
    • Production of mobile handsets in 2018-19 has reached 29 crore units worth Rs. 1.70 Lakh crore from just 6 crore units worth Rs. 19,000 crore in 2014. 
  • While the exports of electronics has increased from Rs. 38,263 crore in 2014-15 to Rs. 61,908 crore in 2018-19, India’s share in global electronics production has reached 3% in 2018 from just 1.3% in 2012.

The launch of schemes is an effort to promote the central government’s clarion call for Aatma Nirbhar Bharat - a self-reliant India - to enhance its capacity and develop an ecosystem as an asset to the global economy.

 

National Policy on Electronics 2019

  • The Policy envisions positioning India as a global hub for Electronics System Design and Manufacturing - (ESDM) by
    • Encouraging and driving capabilities in the country for developing core components, including chipsets, and
    • Creating an enabling environment for the industry to compete globally.

Modified Special Incentive Package Scheme(M-SIPS)

  • To offset disability and attract investments in Electronic manufacturing, Modified Special Incentive Package Scheme (M-SIPS) was notified in 2012.
  • The scheme is available for both new projects and expansion projects. 
  • The scheme provides capital subsidy of 20% in SEZ (25% in non-SEZ) for units engaged in electronics manufacturing. 

Electronics Development Fund (EDF)

  • Creating a vibrant ecosystem of innovation, Research and Development (R&D) with active industry involvement is essential for a thriving electronics industry. 
  • It is with this objective that an Electronics Development Fund (EDF) is set up as a “Fund of Funds” to participate in professionally managed “Daughter Funds” which provide risk capital to companies developing new technologies in the area of Electronics, Nano-electronics and Information Technology (IT). 

Electronic Manufacturing Clusters (EMC)

  • To make India a global player in the field of Electronics Manufacturing and to offset disabilities faced by industries for reliable infrastructure, the Electronics Manufacturing Clusters (EMC) scheme was notified in 2012.
  • The scheme provide support for creation of world-class infrastructure for attracting investments in the Electronics Systems Design and Manufacturing (ESDM) Sector.

 

Source: 

https://pib.gov.in/PressReleasePage.aspx?PRID=1628583

https://www.thehindu.com/business/electronics-incentive-schemes-launched/article31733734.ece#:~:text=Three schemes approved in March,of electronics in the country.