Explained Featured National

A Trilogy of Schemes to Script a Global Chapter in Electronics Manufacturing

trilogy of schemes

While gradually coming out of the Corona Lockdown, India’s unlock period seems to be all about creating a new order wherein India can emerge as a major global supply chain. As Prime Minister Narendra Modi explained at the CII annual session, a slew of reform measures have already placed on the roadmap of creating an Aatma Nirbhar Bharat.

The government has focused on 12 sectors which have the potential to scale up at global level. Among them, the electronics ministry has already announced three big measures that help India to emerge as a global hub of electronics manufacturing. On June 2, 2020, Minister of Electronics & IT, Ravi Shankar Prasad announced a trilogy of schemes with an outlay of ₹50,000 Crore.

The three Schemes together are aimed at enabling large scale electronics manufacturing, creating domestic supply chain of components and state-of-the-art infrastructure and enabling common facilities for large anchor units and their supply chain partners.

A Trilogy

1. Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing

The scheme shall extend 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, for a period of five (5) years subsequent to the base year as defined. The Scheme is open for applications for a period of 4 months initially which may be extended.

2. The 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. The Scheme will be applicable to investments in new units and expansion of capacity/ modernization and diversification of existing units.  Application under the Scheme can be made by any entity registered in India.

3. Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme

This scheme provides 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 chain to set up units in the country.

The EMC 2.0 Scheme provides financial assistance for setting up of both EMC projects and Common Facility Centres (CFCs) across the country. The Scheme is open for receipt of applications for a period of 3 years from the date of notification. Further period of 5 years is available for disbursement of funds to the approved projects.

The Ministry of Electronics & IT has stated that the three new schemes are expected to attract substantial investments, and increase production of mobile phones and their parts to around ₹10 lakh crore by 2025 while generating around 5 lakh direct and 15 lakh indirect jobs.

The Past Record Supports Dreaming Big

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 ₹1.70 lakh crore from just 6 crore units worth ₹19,000 crore in 2014. While the exports of electronics increased from ₹38,263 crore in 2014-15 to ₹61,908 crore in 2018-19, India’s share in global electronics production has reached 3% in 2018 from just 1.3% in 2012.

Building on the edifices created in the last five years, India is now determined to scale further heights in electronic manufacturing and play a global role in this sector.