Lok Sabha Question No. 1381 (UNSTARRED), answered on 2019-11-27
Subject: Exports of Electronics Items
Ministry: COMMERCE AND INDUSTRY
Asked by: Manoj Kishorbhai Kotak

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY

## (DEPARTMENT OF COMMERCE)

## LOK SABHA UNSTARRED QUESTION NO. 1381 TO BE ANSWERED ON 27 th NOVEMBER, 2019

## EXPORTS OF ELECTRONICS ITEMS

## 1381.  SHRI MANOJ KOTAK:

Will the Minister of COMMERCE & INDUSTRY ( वािण�य एवं उ�ोग मं�ी ) be pleased to state:

- (a) whether the manufacturing and exports of electronic items in the country has dropped in the last five years;
- (b) if so, the reasons therefor;
- (c) the details of the manufacturing and exports of electronics in India in the last five years;
- (d) the details of the Government initiatives to boost the manufacturing of electronic items in India; and
- (e) the details of the number of electronic companies started in India under the 'Make in India' Project?

## ANSWER

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## THE MINISTER OF  COMMERCE AND INDUSTRY (SHRI PIYUSH GOYAL)

(a) to (c) : No Sir. Manufacturing and exports of electronic items in the country has not dropped in the last five years.

The details of manufacturing and exports of electronic items for the last five years  are as under :-

## (Value in INR crore)

| Year    | Export #   | Production*   |
|---------|------------|---------------|
| 2014-15 | 38,263     | 190,366       |
| 2015-16 | 39,064     | 243,263       |
| 2106-17 | 39,980     | 317,331       |
| 2017-18 | 41,220     | 388,306       |
| 2018-19 | 61,908     | 458,006       |

(Source: # Export Data taken from DGFT website / * Production data from MeitY Annual Report 201819)

(d) :  Initiatives taken by the Government of India to boost the manufacturing of electronic items in India are at Annexure.

(e) : As per the information provided by India Cellular and Electronics Association (ICEA), about 268 units have come up during last 4-5 years (as against 2 units in 2014), which are manufacturing cellular mobile handsets and their sub-assemblies/ parts/ components in the country.

Under the Modified Special Incentive Package Scheme (M-SIPS), 177 applicants have started incurring investments  amounting  to  Rs.17,144  crore,  of  which 160 applicants have  commenced  commercial production with an investment of Rs.14,591 crore.

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## Steps taken by the Government for promotion of domestic electronics manufacturing :

- (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.  Under  the  scheme,  409 investment  proposals,  involving  investment  of  Rs.1,10,004  crore  are  under  consideration  (as  on 10.10.2019).
- (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, 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) 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.
- (vi) Notified capital goods for manufacture of specified electronic goods are permitted for import at 'Nil' Basic Customs Duty (BCD).
- (vii) 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.
- (viii) 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.
- (ix) 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.
- (x) A graded Basic Customs Duty (BCD) structure has been provided for certain electronic goods such as mobile phone handsets, lithium ion battery, air-conditioners, LCD TVs etc. Under graded BCD structure, in general, BCD on inputs is prescribed at a lower rate than the finished goods to incentivize domestic value addition.

The BCD levied on open cell (15.6' and above) for use in the manufacture of Liquid Crystal Display (LCD) and Light Emitting Diode (LED) TV Panels has been reduced to Nil from 5% vide Notification No.30/2019 dated 17.09.2019, till September 2020. BCD has also been exempted on following inputs to promote domestic manufacturing of open cells:

- Chip on Film
- Printed Circuit Board Assembly (PCBA)
- Cell (glass board/substrate)

## (xi) Corporate Income Tax Reduction :

Domestic companies can now opt for concessional tax regime @22% (25.17% inclusive of surcharge and cess) provided that such a company has not claimed any income tax incentive or exemption. Such companies  will  also  not  be  liable  to  pay  Minimum  Alternate  Tax (MAT).  Further,  to  attract  fresh investments in manufacturing and boost Make in India programme, new provision has been made which allows new domestic companies incorporated on or after October 1, 2019, making fresh investment in manufacturing, and starting operations before March 31, 2023, an option to pay corporate income tax @15% (17.16% inclusive of surcharge and cess). Such company cannot avail any other income tax exemption/ incentive under the Income-Tax Act. Such companies will also not be liable t o pay Minimum Alternate Tax (MAT).

MAT rate for companies availing exemptions/ incentives has been reduced from 18.5% to 15%.

## 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.
- (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  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.
- (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 Electronicsat  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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