Lok Sabha Question No. 4513 (UNSTARRED), answered on 2016-12-14
Subject: Electronic and Telecom Manufacturing
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: LAKHAN LAL SAHU, M. B. RAJESH, ANURAG SINGH THAKUR, SUNIL KUMAR SINGH

## GOVERNMENT OF INDIA

## MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO. 4513

TO BE ANSWERED ON: 14.12.2016

## ELECTRONIC AND TELECOM  MANUFACTURING

## 4513

SHRI LAKHAN LAL SAHU:  SHRI M. B. RAJESH:  SHRI ANURAG SINGH THAKUR: SHRI SUNIL KUMAR SINGH:

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

- (a) the details of import and export of electronic and telecom items during the last three years and the current year;
- (b) whether India is not self sufficient in fulfilling the demands of electronic and telecom equipments indigenously and most of such items are imported particularly from China;
- (c) if so, the details thereof and the action taken by the Government to attend the security concerns of imported items;
- (d) the  steps  taken  by  the  Government  for  domestic  manufacturing  of  electronic  and  telecom  items  particularly  the mobile handsets manufacturing and the results achieved as a result thereof, so far; and
- (e) the details of electronic manufacturing clusters set up in the country, State-wise?

## ANSWER

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

(a),(b) and (c):  The details of import and export of electronic and  telecom items during the last three years and current year as well as details of import of these items from China are as under :

| Import of electronic and telecom equipment for last 3 years and current year (Values in Million USD)   | Import of electronic and telecom equipment for last 3 years and current year (Values in Million USD)   | Import of electronic and telecom equipment for last 3 years and current year (Values in Million USD)   | Import of electronic and telecom equipment for last 3 years and current year (Values in Million USD)   | Import of electronic and telecom equipment for last 3 years and current year (Values in Million USD)   |
|--------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|
| Year                                                                                                   | Total Import of electronic and Telecom equipment                                                       | Import of electronic and Telecom equipment from China                                                  | % Import of telecom equipments from China                                                              | Total Export of electronic and Telecom equipment                                                       |
| 2013-14                                                                                                | 33238.92                                                                                               | 17055.37                                                                                               | 51%                                                                                                    | 7842.99                                                                                                |
| 2014-15                                                                                                | 37539.99                                                                                               | 19727.01                                                                                               | 53%                                                                                                    | 6260.75                                                                                                |
| 2015-16                                                                                                | 40939.82                                                                                               | 22678.65                                                                                               | 55%                                                                                                    | 5936.06                                                                                                |
| Apr'16-Sep'16                                                                                          | 19614.73                                                                                               | 11344.41                                                                                               | 58%                                                                                                    | 2929.00                                                                                                |

Source : Directorate General of Commercial Intelligence and Statistics

As per the 'National Policy on Electronics' 2012, the demand in the Indian market is expected to reach USD 400 Billion by 2020. At the conventional rate of growth, the domestic production is expected to  cater to demand of USD 100 Billion in 2020.  The steps taken by the Government in order to address the security concerns of the nation related to telecom and telecom networks are given at Annexure 'A'.

(d):  Steps taken by the Government  to promote manufacturing of electronic and telecom items are given at Annexure 'B' . As a result of institution of the differential Excise Duty dispensation which was enhanced to 11.5% in favor of domestic mobile  handset  manufacturers  vis-a-vis  importers  in  the  Budget  2015-16  and  implementation  of  phased  manufacturing roadmap, India has rapidly started attracting investments into this sector. The growth in production of LED/ LCD TVs, LED products and mobile handsets is given below :

| Growth in Production of Electronics (Source: MeitY Annual Report 2015-16)   | Growth in Production of Electronics (Source: MeitY Annual Report 2015-16)   | Growth in Production of Electronics (Source: MeitY Annual Report 2015-16)   | Growth in Production of Electronics (Source: MeitY Annual Report 2015-16)   |
|-----------------------------------------------------------------------------|-----------------------------------------------------------------------------|-----------------------------------------------------------------------------|-----------------------------------------------------------------------------|
| Item                                                                        | Production (2014-15)                                                        | Production (2015-16)                                                        | Production Growth (%)                                                       |
| LCD/LED TVs                                                                 | 0.87 crore units                                                            | 1.2 crore units                                                             | 38%                                                                         |

| Light Emitting Diode (LED) Products   | ` 2,172 crore   | `3,590 crore   | 65%   |
|---------------------------------------|-----------------|----------------|-------|
| Mobile Handsets (Nos.)                | 6 crore unit    | 11 crore units | 83%   |
| Mobile Handsets (Value)               | `18,900 crore   | `54,000 crore  | 185%  |

(e):  The details of Electronic Manufacturing Clusters set up in the country are given at Annexure 'C'.

*******

## Annexure-A

## Steps taken by the Government to address the security concerns of the nation related to telecom and telecom networks

- (i) The  Government  has  issued  the  amendment  to  various  telecom  licenses  (i.e.  Access  Services,  National  Long Distance  and  International  Long  distance  Services  Licenses)  on  31.05.2011  and  Internet  Service  Providers  & VSAT (Very Small Aperture Terminal) service providers Licenses  on 03.06.2011 in consultation with Ministry of Home  Affairs  and  Telecom  Industry,  wherein  it  is  inter-alia  mandated  that  Licensee  shall  induct  only  those network elements into his network, which have been got tested as per relevant contemporary Indian or International Security  standards  by  any  International  Agency/Laboratory  of  the  respective  standards.  Subsequently,  these security guidelines have been included as an integral part of Unified License (UL).
- (ii) A  pilot  lab  has  already  been  established  at  Indian  Institute  of  Science  (IISc),  Bengaluru  to  develop  security standards, test processes and test tools for telecom equipment testing and security certification.
- (iii) The  Government  has  decided  to  set  up  Telecom  Testing  and  Security  Certification  Centre  to  develop  systems, processes, adopt/develop  security  standards,  test  tools, etc.,  for  telecom  equipment  security    testing  and certification. Based on these standards, processes and tools, the Centre can accredit the test labs for security testing and certification of telecom equipment used by various Telecom Service Providers.
- (iv) Security Concerns are also taken care by the concerned Department, while they frame their Request For Proposal (RFP).
- (v) Standardization  Testing  and  Quality  Certification  (STQC)    Directorate    of  MeitY  is  the  agency  for  Common Criteria  testing  for  any  critical  machinery/system/  subsystem.  STQC  also  carries  out  compliance  testing  as  and when required by the user Department/ Ministry.
- (vi) Computer Emergency Response Team-India (CERT-In) of MeitY issues periodic advisories concerning the known vulnerabilities and the action required to be taken.

********

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

1. Promotion of electronics hardware manufacturing is one of the pillars of Digital India campaign of the Government.
2. 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.
3. 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 such as  Fabs, production subsidy @10% is also provided.
4. Electronics  Manufacturing  Clusters  (EMC)  Scheme  provides  financial  assistance  for  creating  worldclass 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 ` 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 ` 50 Crore. For setting up of Brownfield  Electronics  Manufacturing  Cluster, 75%  of  the cost of infrastructure, subject to a ceiling of ` 50 Crore is provided.
5. Policy  for  providing  preference  to  domestically  manufactured  electronic  and  telecom  products  in Government procurement is under implementation.
6. Approvals for all foreign direct investment up-to 100% in the electronic hardware manufacturing sector are under the automatic route.
7. 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.
8. 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 excise duty exemption on procurement of indigenously available goods, as per the Foreign Trade Policy.
9. 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.
10. 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.
11. Mandatory compliance to safety standards has been notified for identified Electronic Products with the objective  to  curb  import  of  sub-standard  and  unsafe  electronics  goods.  As  of  now,  30  electronic products are under the ambit of this Order.
12. Government has imposed basic custom duty at 10% on specified telecommunication products that are outside the purview of the Information Technology Agreement and has also imposed education cess on imported  electronic  products  to  provide  parity  between  domestically  produced  goods  and  imported goods.
13. Excise Duty structure for mobile handsets has been changed from 1% without CENVAT credit or 6% with CENVAT credit to 1% without CENVAT credit or 12.5% with CENVAT credit.
14. Telecommunications Standards Development Society, India (TSDSI)- an industry led autonomous 'not for profit' Standards Development Organization (SDO) for Telecom products and services has been set up  for  the  development  of  standards  for  telecom  especially  suited  to  Indian    environment  and incorporation of the same in the  International standards. This will  help Indian companies to develop

standards  for  telecom  products  and  services  for  Indian  specific  environment,  which  is  expected  to promote indigenous R&D and manufacturing.

## Skill Development

15. Two Schemes for skill development of 90,000 and 3,28,000 persons, respectively  in the electronics sector has been approved to provide human resource for the industry.
16. The  Scheme  to  enhance  the  number  of  PhDs  in  the  Electronic  System  Design  and  Manufacturing (ESDM) and IT/IT Enabled Services (ITES) sectors has been approved. 3000 PhDs are proposed to be supported under the Scheme.

## Promotion of Innovation and R&D

17. 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.
18. 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.
19. An Electropreneur park has set up in New Delhi for providing incubation for development of ESDM sector which will contribute IP creation and Product Development in the sector.
20. National Centre of Excellence in Large Area Flexible Electronics (NCFLEX) has been set up in IITKanpur with the objectives to promote R&D;  Manufacturing; Ecosystems; Entrepreneurship; International Partnerships and Human Resources and develop prototypes in collaboration with industry for commercialization.
21. National Centre of Excellence for Technology on Internal Security (NCETIS) has been set up at IITBombay 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.
22. Centre  for  Excellence  on  Internet  of  Things  (IoT)  has  been  set  up  in  Bengaluru  jointly  with NASSCOM.
23. An  Incubation  center  with  focus  on  medical  electronics  has  been  set  up  at  Indian  Institute  of Technology-Patna.
24. An Incubation Center at Kochi with focus on consumer electronics is being set up at IIITM.
25. 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 (SIPEIT);  Multiplier  Grants  Scheme  and  Scheme  for  Technology  Incubation  and  Development  of Entrepreneurs (TIDE) in the area of Electronics, ICT and Management.
26. 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.
27. 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.

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Annexure-C

| #   | State           | Location of EMC                                                                 | Area (Acres)   | Applicant (Chief Promoter/ Special Purpose Vehicle (SPV))                | Financial out lay ( ` in crore)   | Financial out lay ( ` in crore)   |
|-----|-----------------|---------------------------------------------------------------------------------|----------------|--------------------------------------------------------------------------|-----------------------------------|-----------------------------------|
|     |                 |                                                                                 |                |                                                                          | Project Cost                      | Grant in Aid (GIA)                |
| 1   | Andhra Pradesh  | Chilamathur, Anantapur District                                                 | 47.32          | ELCINA RAAGA MAYURI Electronics Park Private Limited                     | 52.13                             | 23.00                             |
| 2   | Andhra Pradesh  | Village-Cherivi, Satyavedu Mandal, Chittor District                             | 94             | Sri City Pvt. Ltd.                                                       | 56.75                             | 27.34                             |
| 3   | Chhattisgarh    | Village-Tuta, Sector-22, Naya Raipur, Raipur District                           | 69.98          | Chhattisgarh State Industrial Development Corporation Ltd. (CSIDC)       | 89.23                             | 43.08                             |
| 4   | Gujarat         | Village-Tunda, Taluka- Mundra, District-Kutch                                   | 631.38         | Mundra Solar Techno park Private Limited (MSTPL)                         | 745.14                            | 315.69                            |
| 5   | Jharkhand       | Adityapur, Saraikela-Kharsawan District                                         | 82.49          | Adityapur Industrial Area Development Authority (AIADA)                  | 97.88                             | 41.48                             |
| 6   | Karnataka (CFC) | Plot No. 360, KIADB Industrial Area, Hebbal, Hottagalli, Mysore                 | 1.11           | Mysore ESDM Cluster Private Limited                                      | 29.53                             | 21.31                             |
| 7   | Kerala          | Kakkanad Village, Kanayannur Taluk, Ernakulam District                          | 66.87          | Kerala Industrial Infrastructure Development Corporation (KINFRA)        | 140.01                            | 50                                |
| 8   | Madhya Pradesh  | Badwai-Bhopal                                                                   | 50             | Madhya Pradesh State Electronics Development Corporation Ltd.(MPSEDC)    | 46.16                             | 20.86                             |
| 9   | Madhya Pradesh  | Purva-Jabalpur                                                                  | 40             |                                                                          | 38.01                             | 17.76                             |
| 10  | Odisha          | Infovalley at Bhubaneswar Industrial Area, Khurda District                      | 203.367        | Odisha Industrial development Corporation (IDCO)                         | 200.76                            | 93.09                             |
| 11  | Rajasthan       | SPL-1, Salarpur, Khushkera, Bhiwadi                                             | 50.3           | ELCINA Electronics Manufacturing Cluster Pvt. Ltd (EEMCPL)               | 46.09                             | 20.24                             |
| 12  | West Bengal     | Sector-IV &V, Falta Industrial Centre, P.S Ramnagar, District South 24 Parganas | 58.04          | West Bengal Electronics Industry Development Corporation Limited (WEBEL) | 58.86                             | 26.52                             |
| 13  | West Bengal     | Naihati town, North 24 Parganas in district                                     | 70             | West Bengal Electronics Industry Development Corporation Limited (WEBEL) | 58.31                             | 25.70                             |

## Details of Electronic Manufacturing Clusters (EMCs) accorded In-principle approval

| #   | State   | Location of EMC   | Proposed area of   | Applicant (Chief Promoter/ Special   | Financial out lay ( ` in crore)   |
|-----|---------|-------------------|--------------------|--------------------------------------|-----------------------------------|

|    |                   |                                                                |   EMC (Acres) | Purpose Vehicle (SPV))                                                      |   Estimated Cost |   Grant in Aid (GIA) |
|----|-------------------|----------------------------------------------------------------|---------------|-----------------------------------------------------------------------------|------------------|----------------------|
|  1 | Andhra Pradesh    | Village-Gurramapalem, Pendurthi Mandal, District-Visakhapatnam |        98     | Andhra Pradesh Industrial Infrastructure Corporation ltd. (APIIC)           |            66.98 |                31.18 |
|  2 | Andhra Pradesh    | Vikruthamala Village, Yerpadu Mandal, Chittor District         |       501.4   | Andhra Pradesh Industrial Infrastructure Corporation ltd. (APIIC)           |           323.62 |               153.45 |
|  3 | Andhra Pradesh    | Tirupati, Renigunta Mandal , Chittor District                  |       122     | Celkon Impex Pvt. Ltd.                                                      |           102.74 |                50    |
|  4 | Bihar             | Abgilla village, Gaurichak district, Patna                     |        21.11  | A.V.Ispat Pvt. Ltd.                                                         |            33.78 |                16.89 |
|  5 | Goa               | Village-Tuem , Taluka Pernem Goa                               |        99.73  | Department of Information Technology, Government of Goa                     |           130.25 |                50    |
|  6 | Gujarat           | Village-Khoraj, Taluk Sanand, District- Ahmadabad              |       190.4   | Gujarat Industrial Development Corporation (GIDC)                           |           314.53 |                95.2  |
|  7 | Rajasthan         | Karoli Industrial Area, Bhiwadi, District-Alwar                |       122.15  | Rajasthan State Industrial Development &Investment Corporation Ltd. (RIICO) |            79.29 |                30.83 |
|  8 | Tamil Nadu        | Annur Taluk, Coimbatore,                                       |       157.71  | ADD Industrial Park(Tamil Nadu) ltd.                                        |           169.82 |                61.15 |
|  9 | Telangana         | e-city Hyderabad                                               |       602.37  | Telangana State Industrial Infrastructure Corporation Ltd.(TSIIC)           |           552.78 |               264    |
| 10 | Telangana         | Maheshwaram,                                                   |       310     | Telangana State Industrial Infrastructure Corporation Ltd.(TSIIC)           |           342.91 |               110.9  |
| 11 | Uttar Pradesh     | Plot No. 6/A, sector-24, Yamuna Expressway, Greater Noida      |       100     | U.P Electronics Corporation Limited (UPLC)                                  |           100    |                47.56 |
| 12 | Uttar Pradesh     | Greater Noida                                                  |       100     | UP Development System Corp. Limited (UPDESCO)                               |            71.42 |                34.29 |
| 13 | Uttar Pradesh     | Plot No. 3/A, Sector 24, Yamuna Expressway                     |       105     | U.P Electronics Corporation Limited (UPLC)                                  |           125.95 |                52.5  |
| 14 | Karnataka (CFC)   | Electronic City, Bangalore                                     |         1.167 | ELCIA ESDM Pvt. Ltd.                                                        |            85.15 |                50    |
| 15 | Maharashtra (CFC) | Pimpri Industrial Area, Pune                                   |         0.61  | MCCIA Electronic Cluster Foundation                                         |            66.1  |                49.1  |
| 16 | Maharashtra (CFC) | Shendra Industrial Area, Aurangabad                            |         2     | Deogiri Electronics Cluster Pvt. Ltd.                                       |            43.88 |                31.93 |

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