- Government has approved SPECS a Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors
- Production Linked Incentive Scheme (PLIS) is for Large Scale Electronics Manufacturing
- Modified Electronics Manufacturing Clusters Scheme (EMC2.0) for infrastructure development in the sector
India is grappling with the COVID-19 outbreak which has hit industry and economy hard. This has come at a time when few industrial sectors are already reeling under pressure due to a slowdown in sales.
But sticking to its ‘Make in India’ plan, much akin to its resolution for 21 days lockdown, Government has taken up a slew of measures to strengthen the manufacturing sector.
In a recent development, the cabinet has approved schemes and financial assistance which include Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS), Production Linked Incentive Scheme (PLIS) for Large Scale Electronics Manufacturing, Modified Electronics Manufacturing Clusters Scheme (EMC2.0).
Scheme for Promotion of manufacturing of Electronic Components and Semiconductors
The Union Cabinet has announced its proposal to offer a financial incentive of 25% of capital expenditure for the manufacturing of goods that constitute the supply chain of an electronic product under the Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS).
The incentive on capital expenditure will cover plant, machinery, equipment, associated utilities, and technology, including for Research & Development to the industrial units investing in the manufacturing of electronic components, semiconductors, ATMP, specialized sub-assemblies and capital goods for these items, in the specified categories.
This will cater to all segments of electronics manufacturing such as Mobile Electronics, Consumer Electronics, Industrial Electronics, Automotive Electronics, Medical Electronics, Strategic Electronics, Power Electronics, Telecom Equipment, Computer Hardware etc. The total cost of the scheme is approximately Rs.3,285 crore, which includes the incentive outlay of approximately Rs.3,252 crore and the administrative expense to the tune of Rs.32 crore.
The vision of National Policy on Electronics 2019 is to position 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 reduce dependence on import of components, enhance the digital security of the nation, and compete globally. The scheme will enable the domestic manufacturing of electronic components and semiconductors to strengthen the electronic manufacturing ecosystem and deepening of the electronics value chain in the country.
The participation of the government is expected to encourage new investments in the electronics sector to the tune of at least Rs. 20,000 crore.
Moreover, this scheme will create an opportunity for direct employment of approximately 1,50,000 in the manufacturing units supported under the scheme, including indirect employment of about three times of direct employment.
Production Linked Incentive Scheme
Production Linked Incentive Scheme (PLIS) for Large Scale Electronics Manufacturing is another major announcement by the Union Cabinet. The approved scheme proposes production linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components including Assembly, Testing, Marking and Packaging (ATMP) units.
The Scheme will offer an incentive of 4% to 6% on incremental sales (over the base year) of goods manufactured in India and covered under target segments, to eligible companies, for five years after the base year as defined.
The production of mobile phones in the country has significantly gone up from around INR 18,900 crore in 2014-15 to INR 1,70,000 crore in 2018-19 and the domestic demand is almost completely being met out of domestic production.
On the other hand, the electronic components market in India has increased from INR 68,342 crore in 2015-16 to INR 1,31,832 crore in 2018-19. Domestic production of electronic components is valued at approximately INR 63, 380 crores, of which around INR 48,803 crore is domestically consumed.
The proposed scheme is likely to benefit both global domestic players, in the field of mobile manufacturing and Specified Electronics Components and facilitate large scale electronics manufacturing in India.
The total cost of the proposed scheme is approximately INR 40,995 crore which includes an incentive outlay of approximately INR 40,951 crore and administrative expenses to the tune of INR 44 crore.
The scheme would lead to large scale electronics manufacturing in the country and open tremendous employment opportunities to the tune of a direct employment generation potential of over 2,00,000 jobs over 5 years and indirect employment of about 3 times of direct employment.
Modified Electronics Manufacturing Clusters Scheme
The Union Cabinet has also approved financial assistance to the Modified Electronics Manufacturing Clusters (EMC2.0) Scheme for the development of world-class infrastructure along with common facilities and amenities through Electronics Manufacturing Clusters (EMCs).
India’s electronics production has increased from Rs. 1,90,366 crore in 2014-15 to Rs. 4,58,006 in 2018-19, at a Compound Annual Growth Rate (CAGR) of about 25%. India’s share in global electronics manufacturing grew from 1.3% in 2012 to 3.0% in 2018. Currently, electronics manufacturing accounts for 2.3% of India’s GDP.
The Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme would further strengthen the Electronics Manufacturing Clusters (EMC) Scheme announced earlier by the government by creating an infrastructure base for the electronics industry in the country and deepening the electronics value chain.
The Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme would support the setting up of both Electronics Manufacturing Clusters (EMCs) and Common Facility Centers (CFCs).
For this Scheme, an Electronics Manufacturing Cluster (EMC) would be set up in geographical areas of a certain minimum extent where the focus is on the development of basic infrastructure, amenities and other common facilities for the ESDM units. For Common Facility Centre (CFC), there should be a significant number of existing ESDM units located in the area and the focus is on upgrading common technical infrastructure and providing common facilities for the ESDM units in such EMCs, Industrial Areas/Parks/industrial corridors.
The total outlay of the propose EMC 2.0 Scheme is Rs. 3,762.25 crore which includes the financial assistance of Rs. 3,725 crore and administrative and management expenses to the tune of Rs. 37.25 crore for eight years.
The Scheme will create a robust infrastructure base for the electronic industry and Plug & Play facility for attracting investment in the electronics sector, generate tax revenue, attract the flow of investment in ESDM sector and lead to greater employment opportunities.
