Lok Sabha Question No. 4653 (UNSTARRED), answered on 2021-03-24
Subject: Impact of New IT Rules
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: T. R. Paarivendhar

## MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## GOVERNMENT OF INDIA LOK SABHA UNSTARRED  QUESTION NO.4653 TO BE ANSWERED ON 24.03.2021

## DEPENDENCY ON CHINESE ELECTRONICS PRODUCTS

## 4653    SHRI MALOOK NAGAR:

## Will the Minister of ELECTRONICS AND INFORMATION TECHNOLOGY be pleased to state:

- (a) the effective schemes of the Government to reduce the country's dependence on Chinese electronics products; and
- (b) the steps taken/being taken by the Government to make available the indigenous counterparts of the Chinese electronic products at the same or reduced prices?

## ANSWER

## MINISTER OF STATE FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI SANJAY DHOTRE)

- (a):  To  boost  domestic  manufacturing,  attract  large  investments  in  the  electronics  value  chain  and  reduce  the country's dependence on Chinese electronics products, following three Schemes have been notified under the aegis of National Policy on Electronics 2019 (NPE 2019):
- (i) Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing notified vide Gazette Notification  No.CG-DL-E-01042020-218990 dated April 01, 2020 extends an incentive of 4% to 6% to eligible companies on incremental sales (over base year) involved  in  mobile  phone  manufacturing  and  manufacturing  of specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units. (available at the link: https://www.meity.gov.in/esdm/pli)
- (ii) Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) notified vide  Gazette  Notification  No.CG-DL-E-01042020-218992  dated  April  01,  2020   provides  financial  incentive  of 25% on capital  expenditure  for  the  identified  list  of  electronic  goods  that  comprise  downstream  value  chain  of electronic products, i.e., electronic components, semiconductor/ display fabrication units, ATMP units, specialized sub-assemblies and capital goods for manufacture of aforesaid goods. (available at the link: https://www.meity.gov.in/esdm/SPECS)
- (iii) Production Linked Incentive Scheme (PLI) for IT Hardware notified vide Gazette Notification No. CG-DLE-03032021-225613 dated March 03, 2021 shall extend an incentive of 4% to 2% / 1% on net incremental sales (over base year) of goods manufactured in India and covered under the target segment, to eligible companies, for a period of four (4) years. The Target Segments under the PLI for IT Hardware include (i) Laptops (ii) Tablets (iii) All-in-One PCs and (iv) Servers. (available at the link: https://www.meity.gov.in/esdm/pliithw)
- (b): Steps are being taken to broad-base the sources of electronic components / raw material imports in India, in addition to making available the indigenous counterparts of the Chinese electronic products, by promoting domestic manufacturing of electronic products. Steps taken by the Government  to promote domestic electronics manufacturing are annexed.

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## Steps taken by the Government to promote domestic electronics manufacturing

1. National Policy on Electronics 2019 : 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

Annexure encouraging and driving capabilities in the country for developing core components, including chipsets, and creating an enabling environment for the industry to compete globally.

2.   100% FDI : As per extant Foreign Direct Investment (FDI) policy, FDI up-to 100% under the automatic route is permitted for electronics  manufacturing  (except  from  countries  sharing  land  border  with  India),  subject  to  applicable  laws  /  regulations; security and other conditions.
3. Modified Special Incentive Package Scheme (M-SIPS) :  The Scheme was notified on 27 th July, 2012 to provide financial incentives to offset disability and attract investments in the electronics manufacturing sector. It was amended in August, 2015 to extend  the  period  of  the  scheme,  enhance  scope  of  the  Scheme  by  including  15  more  product  verticals,  and  attract  more investment. The scheme was further amended in January, 2017 to expedite the investments. The scheme provides subsidy for capital expenditure - 20% for investments in Special Economic Zones (SEZs) and 25% in non-SEZs. The incentives are available for 44 categories / verticals of electronic products and components covering entire electronics manufacturing value chain. The Scheme was open to receive applications till 31.12.2018 and is in the implementation mode.
4.  Electronics  Manufacturing  Clusters  (EMC)  Scheme :  Electronics  Manufacturing  Clusters  Scheme  was  notified  on  22 nd October,  2012  to  provide  support  for  creation  of  world-class  infrastructure  along  with  common  facilities  and  amenities  for attracting investment. Under the Scheme, 19 Greenfield EMCs and 3 Common Facility Centres (CFCs) measuring an area of 3,464  acres  with  total  project  cost  of  INR  3,743  crore  including  Government  Grant-in-Aid  of  INR  1,527  crore  have  been approved.
5.  Electronics  Development  Fund  (EDF) :  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  startups  and  companies developing new technologies in the area of electronics and Information Technology (IT). This fund is expected to foster R&D and innovation in these technology sectors. INR 409 crore has been committed through EDF to 9 Daughter Funds with a targeted corpus of INR 2,626 crore.
6.   Phased Manufacturing Programme (PMP) has  been  notified  to  promote  domestic  value  addition  in  mobile  phones and their  sub-assemblies  /  parts  manufacturing.  As  a  result,  India  has  rapidly  started  attracting  investments  into  this  sector  and significant  manufacturing  capacities  have  been  set  up  in  the  country.  The  manufacturing  of  mobile  phones  has  been  steadily moving from  Semi Knocked Down (SKD) to Completely  Knocked Down (CKD) level, thereby progressively increasing the domestic value addition.
7.   Tariff Structure has been rationalized to promote domestic manufacturing of electronic goods, including, inter-alia, Cellular mobile phones, Televisions, Electronic components, Set Top Boxes for TV, LED products and Medical electronics equipment.
8.   Exemption  from  Basic  Customs  Duty  on  capital  goods :  Notified  capital  goods  for  manufacture  of  specified  electronic goods are permitted for import at 'NIL' Basic Customs Duty.
9.   Simplified import of used plant and machinery : 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.
10. Relaxing the ageing restriction : 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.
11.  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, the Government has issued Public Procurement (Preference to Make in India) Order 2017 vide the Department for Promotion of Industry and Internal Trade (DPIIT) Order dated 15.06.2017 and subsequent revisions vide Orders dated 28.05.2018, 29.05.2019, 04.06.2020 and  16.09.2020.  In  furtherance  of  the  aforesaid  Order,  MeitY  has  notified  mechanism  for  calculating  local  content  for  13 Electronic Products viz., (i) Desktop PCs, (ii) Thin Clients, (iii) Computer Monitors, (iv) Laptop PCs, (v) Tablet PCs, (vi) Dot Matrix Printers, (vii) Contact and Contactless Smart Cards, (viii) LED Products, (ix) Biometric Access Control / Authentication Devices, (x) Biometric Finger Print Sensors, (xi) Biometric Iris Sensors, (xii)  Servers,  and (xiii)  Cellular Mobile Phones,  for procurement to be made from locals suppliers.
12.   Compulsory  Registration  Order  (CRO) :  MeitY  has notified 'Electronics and Information  Technology  Goods (Requirement of Compulsory Registration) Order, 2012' for mandatory compliance to ensure safety of Indian citizens by curbing import of substandard and unsafe electronic goods into India. 63 Product Categories have been notified under the CRO and the order is applicable on 44 product categories.
13.   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.
14.   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.
15.   National Centre of Excellence for Next Generation AMOLED Displays, OLED Lighting and OPV Products has been set up at IIT-Madras with a mandate to collaborate with stakeholders to develop next-generation, state-of-the-art, high-volume and  cost  effective  electronic  components  based  on  organic  devices  to  address  requirements  through  joint  technology developments, to realize indigenous technologies for manufacturing.
16.    Centre on Excellence (CoE) on Medical Electronics and Bio-Physics has been approved to be set up at Andhra Pradesh MedTech Zone (AMTZ), Visakhapatnam  with a  mandate of carrying out various R&D activities, strengthening innovations, IP creation, prototype modelling for Medical device manufacturers, including Electro-Biomaterial technology product manufacturers, etc.
17.   Establishment of Gallium Nitride (GaN) Ecosystem Enabling Centre and Incubator: The project for 'Establishment of Gallium Nitride (GaN) Ecosystem Enabling Centre and Incubator for High Power and High Frequency Electronics' has been approved. The project will be implemented by Society for Innovation and Development (SID), being converted to a Section 8 company titled 'Foundation for Science, Innovation and Development' under the auspices of Indian Institute of Science (IISc) at Centre for Nano Science and Engineering (CeNSE), Bengaluru.

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