Lok Sabha Question No. 4625 (UNSTARRED), answered on 2021-03-24
Subject: Production Linked Schemes for Electronics Manufacturing
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: L.S. Tejasvi Surya

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED  QUESTION NO. 4625

TO BE ANSWERED ON 24.03.2021

## PRODUCTION LINKED SCHEMES FOR ELECTRONICS MANUFACTURING

## 4625.     SHRI L.S. TEJASVI SURYA:

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

- (a) the  objective  and  the  details  of  the  Production  Linked  Scheme  (PLI)  scheme  for electronic manufacturers in the country;
- (b) the  number  of  companies  who  are  availing  benefit  under  the  said  scheme  and  the  total monetary benefit availed by such companies;
- (c) the  measures  taken  by  the  Government  to  promote  indigenous  manufacturing  of  an  entire electronic gadget and not just the assembly of the product in the country; and
- (d) whether  the  Government  is  exploring  any  scheme  to  promote  the  complete  indigenous manufacturing of electronic gadgets and if so, the details thereof?

## ANSWER

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

(a):  The  objective  of  Production  Linked  Incentive  Scheme  (PLI)  for  Large  Scale  Electronics Manufacturing  is  to  boost  domestic  manufacturing  and  attract  large  investments  in  the  electronics value chain, including mobile phones, electronic components and semiconductor packaging.

The  PLI  for  Large  Scale  Electronics  Manufacturing  has  been  notified  under  the  aegis  of  National Policy on Electronics 2019 (NPE 2019) on April 1, 2020. The Scheme 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.

(b): The PLI Scheme for Large Scale Electronics Manufacturing is under implementation. A total of 16 applications have been approved as under:

Mobile  Phones  (Category  -  Invoice  Value  INR  15,000  and  above):  5;  Mobile  Phones  (Category: Domestic Companies): 5; Specified Electronic Components: 6.

The monetary benefit / incentive will be dependent on the incremental sales (over base year) achieved by  the  approved  companies  under  PLI  Scheme.  The  approved  companies  have  not  claimed  any incentive amount till date.

(c)  The  measures  taken  by  the  Government  to  promote  indigenous  manufacturing  of  electronic products is annexed.

(d):  Production  Linked  Incentive  Scheme  (PLI)  for  IT  Hardware  has  been  notified  vide  Gazette Notification No. CG-DL-E-03032021-225613 dated March 03, 2021. The scheme is likely to benefit major global as well as domestic manufacturers of IT hardware products, namely, Laptops, Tablets, All-in-One  PCs,  and  Servers.  The  total  budget  outlay  of  the  PLI  Scheme  for  IT  Hardware  is  INR 7,350 crore over 4 years. The Scheme shall extend incentive of 4% to 2%/ 1% on net incremental sales (over base year, i.e. 2019-20) of goods manufactured in India and covered under the aforesaid target segments, to eligible companies, for a period of four (4) years.

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## Annexure

Measures taken by the government to promote indigenous manufacturing of electronic products in the country

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

To  attract  and  incentivize  large  investments  in  the  electronics  value  chain  and  promote  exports, following three Schemes have been notified under the aegis of 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 provides 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.
- (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.
- (iii) Modified  Electronics  Manufacturing  Clusters  (EMC  2.0)  Scheme notified  vide  Gazette Notification  No.CG-DL-E-01042020-218991  dated  April  01,  2020  provides  support  for creation  of  world  class  infrastructure  along  with  common  facilities and  amenities,  including Ready  Built  Factory  (RBF)  sheds  /  Plug  and  Play  facilities  for  attracting  major  global electronics  manufacturers  along  with  their  supply  chain  to  set  up  units  in  the  country.  The Scheme shall provide financial assistance for setting up of both EMC projects and Common Facility Centres (CFCs) across the country.
- (iv) Production  Linked  Incentive  Scheme  (PLI)  for  IT  Hardware notified  vide  Gazette Notification No.CG-DL-E-03032021-225613 dated March 03, 2021 provides 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 Segment under PLI Scheme includes (i) Laptops (ii) Tablets (iii) All-in-One PCs and (iv) Servers.
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, 20 Greenfield EMCs and 3 Common Facility Centres (CFCs) measuring an area of 3,565 acres  with  total  project  cost  of  INR  3,898  crore  including  Government  Grant-in-Aid  of  INR  1,577 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  handsets  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  handsets  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  handsets,  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.60/2018Customs  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 : 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 and 04.06.2020. In furtherance of the aforesaid Order, MeitY has notified 13 Electronic Products viz., Desktop PCs, Laptop  PCs,  Thin  Clients,  Tablet  PCs,  Computer  Monitors,  Dot  Matrix  Printers,  Contact  and Contactless  Smart  Cards,  LED  Products,  Biometric  Access  Control  /  Authentication  Devices, Biometric Finger Print Sensors, Biometric Iris Sensors and Servers vide Notification dated 07.09.2020.

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 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.

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