Lok Sabha Question No. 3278 (UNSTARRED), answered on 2017-03-22
Subject: IT and ITES Industry
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: PR. SENTHILNATHAN

## GOVERNMENT OF INDIA

## MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO.  3278

TO BE ANSWERED ON: 22.03.2016

## IT AND ITES INDUSTRY

## 3278. SHRI PR. SENTHIL NATHAN:

Will the Minister of Electronics & Information Technology be pleased to state: -

- (a) the  total  contribution  of  IT  and  ITES  industry  in  country's  GDP  and  jobs  created  in  the  last  three years;
- (b) whether the Government is keen in utilising the services of various electronic arms of Department of Electronics for multi task activities of Government than to outsourcing very important and essential activities to private players;
- (c) if so, the details thereof and the decision taken by the Government in this regard; and
- (d) the  steps  taken  and  new  scheme  of  plans  devised  and  implemented  by  the  Government  to  make electronic industries and IT sector at par with foreign electronic and IT companies?

## ANSWER

## MINISTER OF STATE FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI P. P. CHAUDHARY)

(a):  According  to  National  Association  of  Software  and  Services  Companies  (NASSCOM)  IT-ITES industry's contribution relative to India's GDP is about 7.7% for FY 2016-17. The industry is estimated to employ nearly 3.9 million people directly and 10 million people indirectly.  The number of  jobs created by the industry  in the last three years are as under:

| Financial Year   | Total employees ('000)   |   Net addition ('000) | Growth in Total employees   |
|------------------|--------------------------|-----------------------|-----------------------------|
| 2014-15          | 3,485                    |                   217 | 7%                          |
| 2015-16          | 3,688                    |                   203 | 6%                          |
| 2016-17          | 3863                     |                   175 | 5%                          |

Source: NASSCOM strategic Review 2017

(b) and (c): Ministry of Electronics and IT (MeitY) implements various Programmes/Schemes through its various  autonomous  societies/  attached  offices  /  statutory  organizations  /  Section  25  companies,  and sometimes in partnership with private entities, based on need and nature of the projects. MeitY plays the regulatory and monitoring role in case the project is being implemented through private entities.

- (d):  The steps taken and new scheme being implemented by the Government to further promote electronic industries and IT sector is given at Annexure.

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## Steps taken by the Government to promote electronics manufacturing in the country

1. The National Policy on Electronics (NPE 2012) was notified in October 2012 with the vision to create a  globally competitive electronics design and manufacturing industry to meet the country's needs and serve the international market.
2. Modified  Special  Incentive  Package  Scheme  (M-SIPS)  provides  financial  incentives  to  offset  disability  and  attract  investments  in  the Electronics  Systems  Design  and  Manufacturing  (ESDM)  sector.  The  scheme  was  notified  in  July  2012. The  scheme  provides  subsidy for investments in capital expenditure - 20% for investments in SEZs and 25% in non-SEZs. The scheme is available for both new projects and expansion projects. For high technology and high capital investment units like Fabs, production subsidy @10% is also provided.
3. Electronics  Manufacturing  Clusters  (EMC)  Scheme  provides  financial  assistance  for  creating  world-class  infrastructure  for  electronics manufacturing units. The assistance for the projects for setting up of Greenfield Electronics Manufacturing Clusters is 50% of the project cost subject to a ceiling of Rs.50 Crore for 100 acres of land. For larger areas, pro-rata ceiling applies. For lower extent, the extent of support would be decided by the Steering Committee for Clusters (SCC) subject to the ceiling of Rs.50 Crore. For setting up of Brownfield Electronics Manufacturing Cluster, 75% of the cost of infrastructure, subject to a ceiling of Rs.50 Crore is provided.
4.     Policy for providing preference to domestically manufactured electronic products in Government procurement is under implementation.
5.     Approvals for all foreign direct investment up-to 100% in the electronic hardware manufacturing sector are under the automatic route.
6.     For promotion of exports in the sector, Merchandise Exports from India Scheme (MEIS) and Export Promotion Capital Goods (EPCG) Scheme are available under the Foreign Trade Policy, 2015-20. MEIS offers export incentives so as to offset disabilities of manufacturing. The export incentive for electronic goods is available @ 2-3% of FOB value of export. Zero duty EPCG scheme allows import of capital goods at zero customs duty, subject to specified export obligation.
7.     Under the Electronics Hardware Technology Park (EHTP) Scheme, approved units are allowed duty free import of goods required by them for carrying on export activities, CST reimbursement and Central  Excise duty exemption on procurement of indigenously available goods, as per the Foreign Trade Policy.
8.     Tariff Structure has been rationalized to promote indigenous manufacturing of electronic goods, including inter-alia Televisions, Electronic Components, Set Top Boxes, LED Products, Medical Electronics, Solar PV Cells and Microwave Ovens.
9.      To promote indigenous manufacturing of Televisions, Baggage Rules have been amended to ban duty free import of Flat Panel Television Sets w.e.f. August 2014 under the baggage allowance.
1. Mandatory  compliance  to  safety  standards  has  been  notified  for  identified  Electronic  Products  with  the  objective  to  curb  import  of  substandard and unsafe electronics goods. As of now, 30 electronic products are under the ambit of this Order.

## Promotion of Innovation and R&D

2. Electronic Development Fund (EDF) policy has been operationalized to support Daughter Funds in the area of Electronics System Design and Manufacturing,  Nano-electronics  and  IT.  The  fund  is  housed  in  Canbank  Venture  Capital  Fund  Ltd.  The  supported  Daughter  Funds  will promote innovation, R&D, product development and within the country.
3. Keeping in view the huge indigenous requirement on account of roadmap for digitalization of the broadcasting sector, Conditional Access System, entitled iCAS has been developed to promote indigenous manufacturing of Set Top Boxes (STBs). The iCAS is available to domestic STB manufacturers at a price of USD 0.5 per license for a period of three years as against market price of USD 4-5 per license for other competing products. The implementation of iCAS in the cable networks has already started.
4. An Electropreneur park has been  set up in New Delhi for providing incubation for development of ESDM sector which will contribute to IP creation and Product Development in the sector.
5. National Centre of Excellence in Large Area Flexible Electronics (NCFLEX) has been set up in IIT-Kanpur with the objective to promote R&D, manufacturing, ecosystems, entrepreneurship, international partnerships and human  resources and develop prototypes in collaboration with industry for commercialization.
6. National Centre of Excellence for Technology on Internal Security (NCETIS) has been set up at IIT-Bombay with the objective to address the internal security needs of the nation on continuous basis by delivering technology prototypes  required for internal security and to promote domestic industry in internal security.

ANNEXURE

7. Centre for Excellence on Internet of Things (IoT) has been set up in Bengaluru jointly with NASSCOM.
8. An Incubation center with focus on medical electronics has been set up at Indian Institute of Technology, Patna.
9. An Incubation Center at Kochi with focus on consumer electronics is being set up at IIITM.
10. The Ministry of Electronics and Information Technology (MeitY) provides funding under several schemes for promotion of  R&D, including support  for  International  Patents  in  Electronics  &  IT  (SIP-EIT);  Multiplier  Grants  Scheme  and  Scheme  for  Technology  Incubation  and Development of Entrepreneurs (TIDE) in the area of Electronics, ICT and Management.
20.  MeitY has approved a project to be implemented by Global Innovation and Technology Alliance (GITA) to promote innovation, IP, R&D and commercialization of products, etc. in the ESDM sector by providing funding support to an Industry, for doing collaborative research with an Academic Institute in the priority areas with a timeline of not more than two years.
21.  MeitY has approved a project being implemented by Biotechnology Industry Research Assistance Council (BIRAC) to promote scientific and technological research in Medical Electronics sector in India to address the pressing challenges associated with the development of innovative medical electronics and making it available, accessible and affordable to the people at the bottom of the pyramid.
22.   An Incubation Center at Hyderabad with focus on fabless chip design is being set up at IIT- Hyderabad.
23.  The stakeholders of the Electronics System Design & Manufacturing (ESDM) sector through various levels of below the level  (BTL) events such  as  conferences,  seminars  and  workshop  have  been  engaged    to disseminate  the  government  initiatives  and  to  make  the  country  self sufficient in electronic manufacturing.

Digital India Programme : While there is a continuous growth in exports, there are sustained efforts by the Government to further increase exports as  well  as  promote  domestic  IT-ITES  industry.  Government  has  been  implementing  the  Digital  India  Programme  with  a  view  to  create  a knowledge economy and empower citizens. STP scheme, BPO Promotion schemes, CSC 2.0, Make in India & Skill India Programme have helped in generating demand and jobs at the grassroot level. MeitY has also implemented the NDLM (National Digital Literacy Mission) & DISHA (Digital Saksharta Abhiyan) schemes. The major thrust on less-cash digital economy has led to the emergence of new sectors such as fintech, cyber-security, IOT, big data, data analytics etc.

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