The Union Cabinet has approved three schemes to enable large scale electronics manufacturing and attract fresh investments worth at least ₹50,000 crore in the sector.
Briefing the media on the Cabinet’s decision, electronics and information technology minister Ravi Shankar Prasad on Saturday said a ₹40,995 crore production-linked incentive manufacturing scheme has been approved to boost domestic production and attract investment in mobile phone manufacturing, specified electronic components, including assembly, testing, marking and packaging (ATMP) units.
“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 years subsequent to the base year as defined," a government statement said. The funds allocated are to be used over five years.
As a result, domestic value addition for mobile phones is expected to witness 35- 40% jump by 2025 from 20-25% now. The scheme has the potential of creating 8,00,000 direct and indirect jobs.
Environment and information and broadcasting minister Prakash Javadekar said while mobile manufacturing has seen a significant jump in India in the last five years, it is time to take it to the next stage by encouraging manufacturing of electrical components, semiconductors, and setting up production clusters.
India hopes to replace China in Asia’s supply chain, given that the outbreak in that country has led Beijing to order shutting down of factories, ports and such and putting cities under lockdown to contain the spread of the pandemic. Electronics goods weigh heavily on the country’s trade deficit and are one of the top three items imported in India.
The Cabinet also cleared a ₹3,285 crore scheme for promotion of manufacturing of electronics components and semiconductors (SPECS), which will give financial incentive of 25% on capital expenditure for the identified list of electronic goods comprising downstream value chain of electronic products--electronic components, ATMP units, specialized sub-assemblies, among others--all of which involve high value added manufacturing.
SPECS will be applicable on investments in new units and expansion of capacity and diversification of existing units. “The scheme will be open for applications initially for 3 years from the date of its notification. The incentives will be available for investment made within 5 years from the date of acknowledgement of application," the statement said. The funds allocated will be spread over eight years.
Electronics Manufacturing Clusters (EMC) 2.0 was also approved to create infrastructure along with industry specific facilities like common facility centers, ready built factory sheds, among others. Towards this scheme, the government has allocated Rs. 3,762.25 crore for a period of 8 years.
“The scheme will provide financial assistance up to 50% of the project cost subject to ceiling of ₹70 crore per 100 acres of land for setting up of Electronics Manufacturing Cluster projects. For Common Facility Centre (CFC), financial assistance of 75% of the project cost subject to a ceiling of ₹75 crore will be provided," it said.