Union Minister Ravi Shankar Prasad, on , unveiled the guidelines for electronics manufacturing schemes with an aim to strengthen domestic manufacturing of five global and five Indian mobile phone makers.The three Schemes namely, the Production-Linked Incentive Scheme (PLI), Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme, which were notified by the Ministry of Electronics and IT (MietY) , have a total outlay of Rs 50,000 crore.
The production linked incentive (PLI) scheme, in particular, has been applauded by various stakeholders, while many said that the Scheme for Promotion of Manufacturing of Components and Semiconductors (SPECS) will help promote component manufacturing in the country.The PLI instituted on mobile phones is indeed the first ever scheme announced by a Government in the post-independence period, whereby, similar PLI is extended for both domestic Indian champions and global supply,” said Pankaj Mohindroo, Chairman, India Cellular and Electronics Association (ICEA).
The PLI scheme takes the largest portion of what the government announced, standing at approximately Rs. 40,000 crore and is expected to help large scale mobile manufacturing. It offers an incentive of 4-6% over a period of 5 years for manufacturing in India. The application dates are open.
India Electronics Manufacturing Scheme
Nitin Kunkolienker, President of the Manufacturers Association of Information Technology (MAIT), also applauded the schemes, while clarifying that they had been in the works for 2-3 months. “The move in this scheme will help meet targets under the National Policy on Electronics (NPE) 2019,” he said. “Also, it is imperative that the government bring the major electronics ecosystem onboard through these schemes,
In its announcement today, the government said that companies can now start applying for the benefits of these schemes. At the moment, mobile phone makers etc. assemble products here after importing components from overseas. SPECS provides a 25% reimbursement on capital expenditure for active and passive components, semiconductors, ATMP and specialized sub assemblies.
Large Scale Electronics Manufacturing
- The scheme proposes a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain including electronic components and semiconductor packaging.
- Under the scheme, electronic manufacturing companies will get an incentive of 4 to 6% on incremental sales (over base year) of goods manufactured in India and covered under target segments, to eligible companies over a period of next 5 years.
- The scheme shall only be applicable for target segments namely mobile phones and specified electronic components.
- The government estimates that with the PLI scheme, domestic value addition for mobile phones is expected to rise to 35-40% by 2025 from the current level of 20-25% and generate additional 8 lakh jobs, both direct and indirect.
- The production of mobile phones in the country has surged eight-times in the last four years from around Rs 18,900 crore in 2014-15 to Rs 1.7 lakh crore in 2018-19 .
Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors
- Under the scheme, a financial incentive of 25% of capital expenditure has been approved by the Union Cabinet for the manufacturing of goods that constitute the supply chain of an electronic product.
- The SPECS notified for manufacturing of electronics components and semiconductors has a budget outlay of Rs 3,285 crore spread over a period of eight years.
- The government estimates that push for manufacturing of electronics components and electronic chips will create around 6 lakh direct and indirect jobs.
Modified Electronics Manufacturing Clusters Scheme
- The EMC 2.0 has a total incentive outlay of Rs 3,762.25 crore spread over a period of 8 years with an objective to create 10 lakh direct and indirect jobs under the scheme.
- The EMC 2.0 scheme will provide financial assistance up to 50% of the project cost subject to a ceiling of Rs 70 crore per 100 acres of land for setting up of Electronics Manufacturing Cluster projects.
- Electronic manufacturing clusters to be set up under the scheme will be spread in an area of 200 acres across India and 100 acres in North East part of the country.