New Delhi: To boost its Make In India and Digital India programmes, the government on Tuesday extended capital subsidy to 15 new electronic products including consumer electronics items and Internet of Things (IoT) products.

The cabinet, which met on Tuesday, extended the benefits under the modified special incentive package scheme (MSIPS) to boost electronics manufacturing in the country. The scheme, which was expiring on 26 July, has now been extended for another five years.

MSIPS, which was first approved in July 2012, provides capital subsidy to units engaged in electronics manufacturing of 20% within special economic zones (SEZs) and 25% outside SEZs.

However, the initial response to the scheme was lukewarm and only 10 units were approved under the scheme by May 2014 involving investments of 1,369 crore.

Under the Digital India and Make In India programmes of the National Democratic Alliance government, the scheme has received renewed emphasis. Officials familiar with the matter claimed that in last 14 months, 32 proposals involving investments of nearly 9,000 crore with employment potential of 12,000 have been approved.

The benefits of the scheme now have been extended to product categories including smart cards; liquid crystal modules; consumer appliances such as refrigerator, air-conditioners, microwaves and fully automatic washing machines; electronic product design; IoT products; capital equipment for electronics manufacturing, fabrication and semiconductor chips, and remanufacturing of electronic products.

Earlier, in another boost to Make In India programme, on 17 July, the Central Board of Excise and Customs reinstated a significant excise duty advantage of up to 11.5% to domestic manufacturers over imported items by restoring a differential duty regime, earlier struck down by the Supreme Court. This is likely to encourage domestic manufacturing of electronics items.

While the demand for electronic products in India is expected to reach $400 billion by 2020, its manufacturing has been negligible. As a result, the import value of electronics items is expected to exceed the import value of oil by 2020.

The government under its Digital India programme has set an ambitious goal of net zero imports in electronics. “To realize this goal, the government’s effort is to make India a globally attractive destination for electronics manufacturing, where electronics is manufactured not only to meet fast-growing domestic demand, but also to export to other countries. The electronics sector has the potential to attract investment of $100 billion and provide employment to 28 million people. Besides, growth of domestic manufacturing in the sector will also be a big step towards creating a cyber secure ecosystem in the country," said an official, who requested anonymity.

The cabinet committee of economic affairs also approved the proposal to restructure the Integrated Coastal Zone Management project aimed at protecting and conserving the coastal environment by revising the cost estimate from 1,156 crore to 1,580 crore, and extended the project till December 2017.

The project, carried out in assistance with the World Bank, comprises demarcation of the hazard line all along the coastal area that is being mapped through the Survey of india. The project also involves state-level integrated coastal zone management plan preparation and certain identified interventions mainly to improve the livelihood of the local communities in the states of Gujarat, Odisha and West Bengal.

The cabinet also revised the cost estimate of 1,200-megawatt Punatsangchu-I hydroelectric project in Bhutan to 9,376 crore.

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