Lok Sabha Question No. 5209 (UNSTARRED), answered on 2019-07-24
Subject: Special Assistance to Electronic Industries
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Omprakash Bhupalsinh alias Pawan Rajenimbalkar, Krupal Balaji Tumane

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED  QUESTION NO.5209

TO BE ANSWERED ON 24.07.2019

## SPECIAL ASSISTANCE  TO ELECTRONIC INDUSTRIES

## 5209. SHRI OMPRAKASH BHUPALSINH ALIAS PAWAN RAJENIMBALKAR: SHRI KRUPAL BALAJI TUMANE:

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

- (a) whether as per Industry Body Manufacturing Association, manufacturing capability of personal computer in the country is not being utilized;
- (b) if so, the details thereof and the reasons therefor;
- (c) whether  the  Government  proposes  to  provide  any  special  assistance  to  companies  for  manufacturing  of smartphones and tablets in India;
- (d) if so, the details thereof and the time by which a final decision is likely to be taken by the Government in this regard; and
- (e) the other steps taken by the Government to improve the infrastructure facility for IT and electronics sector?

## ANSWER

## MINISTER FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI RAVI SHANKAR PRASAD)

(a)  and  (b):  As  per  Manufacturers  Association  for  Information  Technology  (MAIT),  the  manufacturing  capacity  of personal computers in the country is underutilized to the extent of about 80% on account of cheaper imports and certain disabilities which render domestic personal computer manufacturing uncompetitive on account of lack of level playing field vis-à-vis competing nations. These include lack of adequate infrastructure, domestic supply chain and logistics; high  cost  of  finance;  inadequate  components  manufacturing  base  and  limited  focus  on  R&D  by  the  industry.  As  a signatory  to  the  Information  Technology  Agreement  (ITA-1)  of  the  World  Trade  Organization  (WTO),  India  has implemented zero import duty regime on 217 tariff lines, including personal computers.

(c), (d) and (e): The Government has notified the National Policy on Electronics 2019 (NPE 2019) on 25.02.2019, with the vision to position India as a global hub for Electronics System Design and Manufacturing (ESDM) and create an enabling environment  for the industry to compete  globally. NPE  2019  is  available at the following link: https://meity.gov.in/esdm/policies. The mission of NPE 2019 inter-alia includes the following:

-  Promote  domestic  manufacturing  in  the  entire  value-chain  of  Electronics  System  Design  and  Manufacturing (ESDM), including core components and materials to increase the domestic value addition and reduce dependence on import of electronic goods by focusing on skill, technology, scale and the global market.
-  Promote ease of manufacturing by introducing new/ innovative fiscal incentives and augmenting the existing ones for the ESDM industry to make electronics manufacturing in India globally competitive.

Further,  the  Phased  Manufacturing  Programme  (PMP)  for  mobile  phones,  including  smart  phones,  and  related subassemblies/ components manufacturing has been implemented with the objective of progressively increasing the domestic value addition for establishment of a robust cellular mobile phone manufacturing ecosystem in the country. As  a  result,  India  has  rapidly  started  attracting  investments  into  this  sector  and  mobile  phone  manufacturing  has emerged as a flagship sector in the electronics manufacturing space.

In  2018-19,  the  production  of  cellular  mobile phones  reached  approximately  INR  1,70,000  crore,  compared  to  INR 18,900 crore  in  2014-15.  The  production  of  mobile  phones  in  volume  terms  reached  29  crore  units  in  2018-19,  as compared to production of 6 crore units in 2014-15.

The steps taken by the Government for promotion of domestic electronics manufacturing industry and exports from the country, including infrastructure facility for electronics sector, are annexed.

*******

Annexure

## Steps taken by the Government for promotion of domestic electronics manufacturing industry and exports from the country

- (i) Modified  Special  Incentive  Package  Scheme  (M-SIPS)  provides  financial  incentives  to  offset  disability  and  attract  investments  in  the electronics manufacturing sector. The scheme was open to receive applications till 31.12.2018 for new projects as well as expansion projects. The scheme provides 20-25% subsidy for investments in capital expenditure for setting up of an electronic manufacturing facility (20% for SEZ Units and 25% for non-SEZ Units). The incentives are available for 44 categories of electronic products and product components. So far, 212 projects have been approved with proposed investments of INR 55,182 crore. The incentives committed against these 212 projects are INR 5,635 crore.
- (ii) The Electronics Manufacturing Clusters (EMC) Scheme was notified to provide financial support for creation of state-of-art infrastructure for electronics manufacturing units. The scheme was open for receipt of application for a period of 5 years, i.e., upto 21.10.2017. Further period of 5 years is available for disbursement of funds for the approved applicants. Under the scheme, financial assistance for Greenfield EMC was available upto 50% of the project cost subject to a ceiling of INR 50 crore for every 100 acres of land and for Brownfield EMC, 75% of the cost of infrastructure, subject to a ceiling of INR 50 crore was provided as Grant. Under the scheme, approval has been accorded for setting up of 20 Greenfield EMCs and 3 Common Facility Centres (CFCs) in 15 States across the country.
- (iii) Tariff Structure has been rationalized to promote domestic manufacturing of electronic goods, including, inter-alia, Cellular mobile handsets, Televisions,  Electronic  components,  Set  Top  Boxes  for  TV,  Personal  Computers,  LED  products  and  Medical  electronics  equipment.  To promote domestic value addition in mobile handsets and their parts/ components manufacturing, a Phased Manufacturing Programme (PMP) has been notified. As a result, India has rapidly started attracting investments into this sector and significant manufacturing capacities have been set up in the country during the past four years. The manufacturing of mobile handsets and their parts/ components has been steadily moving from Semi Knocked Down (SKD) to Completely Knocked Down (SKD) level, thereby progressively increasing the domestic value addition.
- (iv) As per extant Foreign Direct Investment (FDI) policy, FDI upto 100% under the automatic route is permitted for electronics manufacturing, subject to applicable laws/ regulations; security and other conditionalities.
- (v) 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. Zero duty EPCG scheme allows import of capital goods at zero customs duty, subject to specified export obligation.
- (vi) The import of used plant and machinery having a residual life of at least 5 years for use by the electronics manufacturing industry has been simplified through the amendment of Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, vide Ministry of Environment, Forest and Climate Change Notification dated 11.06.2018.
- (vii) Notified capital goods for manufacture of specified electronic goods are permitted for import at 'Nil' Basic Customs Duty.
- (viii) The Department of Revenue vide Notification No.60/2018-Customs dated 11.09.2018 has amended the Notification No.158/95-Customs dated 14.11.1995, relaxing the ageing restriction from 3 years to 7 years for specified electronic goods manufactured in India and re-imported into India for repairs or reconditioning.
- (ix) In  order  to  ensure  safety  of  Indian  citizens  by  curbing  import  of  substandard  and  unsafe  electronic  goods  into  India,  MeitY  has  notified 'Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012' for mandatory compliance. As per the provisions of the order, the manufacturer has to get the product tested in laboratories recognized by Bureau of Indian Standards (BIS), take registration from BIS and put the registration mark on the product. 44 product categories have been notified under the order.
- (x) The Government has notified Public Procurement (Preference to Make in India) Order 2017 to encourage 'Make in India' and to promote manufacturing and production of goods and services in India with a view to enhancing income and employment.  In furtherance of the aforesaid Order, MeitY has notified local content for 11 Electronic Products, viz., Desktop PCs, Laptop PCs, Tablet PCs, Dot Matrix Printers, Contact and Contactless Smart Cards, LED Products, Biometric Access Control/ Authentication Devices, Biometric Finger Print Sensors, Biometric Iris Sensors, Servers, and Cellular Mobile Phones.
- (xi) The National Policy on Electronics 2019 (NPE 2019) has been notified on 25.02.2019. The vision of NPE 2019 is to position India as a global hub for Electronics System Design and Manufacturing (ESDM) by encouraging and driving capabilities in the country for developing core components, including chipsets, and creating an enabling environment for the industry to compete globally.

## Promotion of Innovation and R&D

- (xii) Electronics Development Fund (EDF) has been set up as a 'Fund of Funds' to participate in professionally managed 'Daughter Funds' which in  turn  will  provide  risk  capital  to  companies  developing  new  technologies  in  the  area  of  electronics,  nano-electronics  and  Information Technology (IT). This fund is expected to foster R&D and innovation in these technology sectors. Currently six Daughter Funds are being funded.
- (xiii) Ministry  of  Electronics  and  Information  Technology  (MeitY)  provides  grant-in-aid  support  to  institutes  of  higher  learning  like  IITs,  IISc, Central Universities and R&D Organizations to conduct research in identified thrust areas. These research programmes are aimed to deliver proof of concept, technology/ product development and transfer of technology. During the last few years, several research initiatives have been taken in these areas. These research programmes also result in generation of specialized manpower to support 'Make in India'.
- (xiv) Indian Conditional Access System (iCAS) has been developed in Public-Private Partnership (PPP) mode to promote indigenous manufacturing of Set Top Boxes (STBs). The implementation of iCAS in the cable networks is underway.
- (xv) An Electropreneur park has been set up in New Delhi for providing incubation for development of ESDM sector which will contribute IP creation and Product Development in the sector.
- (xvi) National Centre of Excellence in Large Area Flexible Electronics (NCFLEX) has been set up in IIT-Kanpur with the objectives to promote R&D; Manufacturing; Ecosystem; Entrepreneurship; International Partnerships and Human Resources and develop prototypes in collaboration with industry for commercialization.
- (xvii) 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.
- (xviii) Centre for Excellence on Internet of Things (IoT) has been set up in Bengaluru, jointly with NASSCOM.
- (xix) An Incubation centre with focus on medical electronics has been set up at IIT-Patna.
- (xx) A fabless chip design incubation centre has been set up in IIT Hyderabad to incubate start-ups in semiconductor design and to provide one-stop service to start-ups intending to enter this space.
- (xxi) A    Centre  of  Excellence  (CoE)  on  FinTech  at  STPI  Chennai  has  been  set  up  to  provide  infrastructure,  resources,  coaching/  mentorship, technology support and funding to emerging start-ups in the FinTech sector through a collaborative approach including M/s intellect design as industrial  partner,  NPCI,  UIDAI  and  Partner  Banks  as  Yes  Bank,  PayPal,  HSBC,  IIT  Chennai  as  knowledge  partner  and  TiE  Chennai  to provide industrial connect.
- (xxii) An IoT OpenLab - a Centre of Excellence (CoE) for Internet of Things in partnership with Arrow Electronics at STPI Bangalore has been set up to provide academic and business mentoring of the startups in the IoT emerging technology area for developing products and/ or services around IoT.
- (xxiii) An  ESDM  Incubation  Centre  has  been  set  up  at  Bhubaneswar  with  the  objective  of  creating  a  holistic  eco-system  to  promote  ESDM innovation, R&D and create Indian intellectual property in the eastern region of the country.

********