Lok Sabha Question No. 5067 (UNSTARRED), answered on 2019-07-24
Subject: Manufacturing of Electronic Products
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: D.K. Suresh

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED  QUESTION NO.5067

TO BE ANSWERED ON 24.07.2019

## MANUFACTURING OF ELECTRONIC PRODUCTS

## 5067.     SHRI D.K. SURESH:

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

- (a) whether  the  Government  has  any  scheme  to  encourage  the  people  to  produce electronic  products/goods  with  indigenous  technology  in  the  country  and  if  so,  the details thereof;
- (b) whether the electronic goods production in the country is not adequately encouraged to compete with global standards and other branded electronic products and if so, the details thereof and the reasons therefor;
- (c) whether  the  Government  has  any  proposal  to  encourage  the  Indian  companies  to produce  better  electronic  goods  and  products  to  compete  with  world  players  in  the sector; and
- (d) if so, the details thereof and the steps taken by the Government in this regard?

## ANSWER

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

(a),  (b),  (c)  and  (d):  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. The mission of NPE 2019 inter-alia includes the following:

-  Promote  domestic  manufacturing  in  the  entire  value-chain  of  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.
-  Promote R&D to develop electronic products, including associated design and creation of Intellectual Properties, for the domestic as well as global markets.

The salient features of NPE 2019 are at Annexure-I . NPE 2019 is available at the following link: https://meity.gov.in/esdm/policies.

The  steps  taken  by  the  Government  for  promotion  of  domestic  electronics  manufacturing industry and exports from the country are at Annexure-II.

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## Salient features of the National Policy on Electronics 2019 (NPE 2019)

The salient features of NPE 2019 inter-alia include:

- (a) Creating eco-system for globally competitive ESDM sector
- (b) Promotion of electronic components manufacturing ecosystem
- (c) Special  package  of  incentives  for  Mega  Projects  which  are  extremely  high-tech  and entail huge investments, such as semiconductor facilities (including trusted foundries), display fabrication, photonics and LED chip fabrication units
- (d) Encouraging Industry-led R&D and innovation and promoting start-up eco-system in all sub-sectors  of  electronics,  including  emerging  technology  areas  such  as  5G,  IoT/ Sensors,  Artificial Intelligence (AI), Machine Learning, Augmented Reality (AR) and Virtual Reality (VR), Drones, Robotics, Additive Manufacturing, Gaming and Entertainment, Photonics, Nano-based devices, as well as thrust areas such as medical electronics,  defence  and  strategic  electronics,  automotive  electronics,  cyber  security, power electronics and automation
- (e) Providing  incentives  and  support  for  significantly  enhancing  availability  of  skilled manpower, including re-skilling, in the ESDM sector
- (f) Promoting  research,  innovation  and  support  to  industry  for  green  processes  and sustainable e-Waste management, including inter-alia facilitation of citizen engagement programmes  for safe disposal of e-Waste in an environment friendly manner, development of e-Waste recycling industry and adoption of best practices in e-Waste management
- (g) Emphasis on Cyber Security and promoting trusted electronics value chain initiatives to improve India's national cyber security profile
- (h) Providing  special  support  for  developing  core  competencies  in  the  following  subsectors of Electronics:
-  Fabless Chip Design Industry
-  Medical Electronic Devices Industry
-  Automotive Electronics Industry and Power Electronics for Mobility
-  Strategic Electronics Industry
- (i) Creation of Sovereign Patent Fund (SPF) to promote the development and acquisition of IPs in ESDM sector

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## 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  nonSEZ  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,  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 startups 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.

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