Lok Sabha Question No. 3679 (UNSTARRED), answered on 2019-01-02
Subject: Self-Sufficiency in Domestic Electronic Production
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: SHIVKUMAR CHANABASAPPA UDASI

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED  QUESTION NO.3679

TO BE ANSWERED ON 02.01.2019

## SELF-SUFFICIENCY IN DOMESTIC ELECTRONIC PRODUCTION

## 3679.    SHRI SHIVKUMAR UDASI: SHRI ADHIR RANJAN CHOWDHURY:

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

- (a) whether  domestic  production  is  insufficient  to  meet  increasing demand in  electronic sector and if so, the reasons therefor;
- (b) whether  the  Government  has  finalised  the  National  Policy  on  Electronics  to  boost electronics manufacturing in India and if so, the details thereof; and
- (c) the  action  taken  by the Government  to  promote  manufacturing  and  not  superficial assembly of components in the electronics sector?

## ANSWER

## MINISTER OF STATE FOR   ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI S.S.AHLUWALIA)

- (a):    While the domestic production is not sufficient to meet increasing demand in electronics sector  in  the  country,  it  is  increasingly  being  met  from  domestic  production.  As  a  result  of various  measures  taken  by  the  Government  over  the  last  few  years  to  address  the  challenges faced by the electronics sector, manufacturing of electronic products has shown a robust growth in the country. The domestic electronics hardware production has increased from INR 1,90,366 crore in 2014-15 to INR 3,87,525 crore in 2017-18, registering a Compound Annual Growth Rate (CAGR) of 26.7%.
- (b):        Ministry  of  Electronics  and  Information  Technology  (MeitY)  has  formulated  the  draft National Policy on Electronics 2018 (NPE 2018) after extensive stakeholder consultation. The draft  NPE 2018 was put up for public consultation on 10.10.2018 and views/ comments were invited  till  15.11.2018.  The  draft  of  NPE  2018  has  accordingly  been  revised  by  suitably incorporating the comments/ inputs received through the process of public consultation. Salient features of the draft NPE 2018 are given in Annexure-1 .
- (c):    As a result of implementation of the Phased Manufacturing Programme (PMP) for cellular mobile handsets and their sub-assemblies, parts and components, wherein 14 sub-assemblies of cellular  mobile handsets are being indigenized in a phased manner, domestic manufacturing is steadily moving from Semi Knocked Down (SKD) to Completely Knocked Down (SKD) level, thereby progressively increasing the domestic value addition. Several steps have been taken by

the Government for promotion of electronics manufacturing in the country. These are listed at Annexure-2 .

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Annexure-1

## Salient features of the draft National Policy on Electronics 2018 (NPE 2018)

The Ministry of Electronics and Information Technology (MeitY) has formulated the National Policy on Electronics 2018 (NPE 2018), which envisions positioning 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.

The salient features of the policy include:

1. Creating eco-system for globally competitive ESDM sector :  Promoting domestic manufacturing and export in the entire value-chain of ESDM for economic development to achieve a turnover of USD 400 billion by 2025. This will include targeted production of 1.0 billion mobile handsets by 2025, valued at USD 190 billion (approx. INR 13 lakh crore), including 600 million mobile handsets valued at USD 110 billion (approx. INR 7 lakh crore) for export.
2. Promotion of Electronic Components Manufacturing Ecosystem : Provide incentives and support for  manufacturing  of  core  electronic  components  (both  active  and  passive,  including  bare  PCBs, PCB laminates,  chip  components,  connectors,  wound  components,  switches,  relays,  ferrites,  etc.), lithium-ion cells (and such other cells that may be commercialized in future with advancement of technology) for electronics/ EV applications, fuel cells, preform of silica, optical fibre, solar cells, raw materials for electronic components, etc., and ATMP of semiconductors.
3. Mega Projects : Provide special package of incentives for mega projects which are extremely hightech  and  entail  huge  investments,  such  as  semiconductor  facilities  (including  trusted  foundries), display  fabrication,  photonics  and  LED  chip  fabrication  units,  including  according  infrastructure status to these units.
4. Formulate  suitable  schemes  and  incentive  mechanisms  to  encourage  new  units  and  expansion  of existing units in electronics manufacturing sector.
5. Focus on Phased Manufacturing Programmes (PMP) for various electronic goods, on the lines  of PMP for Mobile Phones and sub-assemblies thereof.
6. Focus  on  encouraging  Industry-led  R&D  and  Innovation  in  all  sub-sectors  of  electronics : Promote path-breaking research, grass root level innovations and early stage Start-ups in 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 electronics, automotive electronics, cyber security, strategic electronics, power electronics and automation, having major economic potential, with a special focus on applying the outcomes, including frugal solutions, to solve real-life problems. Towards this, in addition to premier institutes like IITs, NITs, IIITs, and Central Universities, the institutes in small cities shall also be encouraged. Chairs in premier institutions will be established for focused research in the aforesaid
7. emerging  technology  areas  and  thrust  areas  of  electronics,  including  setting  up  framework  for creation of an ecosystem for promoting design and IP in the country.
7. Promote and create a framework for comprehensive start-up eco-system in aforementioned emerging technology areas.
8. Improve ease-of-doing Business for the ESDM Industry.
9. Provide incentives and support for significantly  enhancing availability of skilled manpower in the ESDM sector.
10. Promote 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.
11. Develop manufacturing capacities for high performance computing.
12. Provide support for Micro, Small and Medium Enterprises (MSME) in ESDM sector.

## 13. Special thrust on :

-  Fabless Chip Design Industry
-  Medical Electronic Devices Industry
-  Automotive Electronics Industry and Power Electronics for Mobility
-  Strategic Electronics Industry
14. Emulation/ rapid prototyping infrastructure at certain locations that are accessible to all fabless startups in the country.

## 15. Emphasis on Cyber Security :

- a. Enhance  understanding  of  cyber  security  issues/  concerns,  risks  and  mitigation  measures  thereof pertaining to electronic products.
- b. Encourage development of adequate capacities for testing.
- c. Encourage use of IT products tested and evaluated for security, based on standards like Common Criteria/ ISO 15408.
- d. Promote the use of secure chips to reduce cyber security risks.
- e. Promote start-up eco-system for development of photonics, nano-based devices and cyber security products.
16. Promote trusted electronics value chain initiatives to improve India's national cyber security profile and  control  its  supply  chain  across  national  defence  (military,  intelligence,  space)  and  critical national infrastructure (energy grids, communication networks, digital economy, etc.).
17. Exploring  the  possibility  of  leveraging  Defence  Offsets,  in  consultation  with  the  Department  of Defence Production (DDP), for development of electronic components manufacturing.
18. Create Sovereign Patent Fund (SPF) to promote the development and acquisition of IPs in ESDM sector.

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Annexure-2

Steps taken by the Government for promotion of electronics manufacturing in the country:

Modified Special Incentive Package Scheme (MSIPS) provides financial incentives to offset disability and attract  investments  in  the  Electronics  Systems  Design  and  Manufacturing  (ESDM)  sector,  including electronic components. The scheme is available for both new projects and expansion projects, and is open to receive applications till 31.12.2018.

- (i) 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 21st October, 2017. Further period of 5 years is available for disbursement of funds for the approved applicants. Under the scheme, 20 Greenfield EMCs  and  3  Common  Facility  Centres  (CFCs)  covering  a  land  area  of  3,565  acres  have  been accorded final approval for development of infrastructure and common facilities at a cost of Rs.3,898 crore, including Government Grant-in-aid of Rs.1,577 crore. An area of 3,565 acres across 15 states is being developed in these EMCs for setting up of Electronics industry across the country.
- (ii) Tariff  Structure  has  been  rationalized  to  promote  domestic  manufacturing  of  electronic  goods, including inter-alia Mobile  Handsets,  Televisions,  Electronic  Components,  Set  Top  Boxes,  LED Products, Medical Electronics, Solar PV Cells and Microwave Ovens. 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 three  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.
- (iii) As per extant Foreign Direct Investment (FDI) policy, FDI upto 100% under the automatic route is permitted for electronic product manufacturing, subject to applicable laws/ regulations; security and other conditionalities.
- (iv) 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.
- (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.
- (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.

## Promotion of Innovation and R&D

- (viii) 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. EDF will be investing  in  13  Daughter  Funds  over  a  period  of  4-5  years.  The  total  targeted  corpus  of  these  13 Daughter Funds is Rs.6,950 crore and the amount committed by EDF to these 13 Daughter Funds is Rs.857 crore. As at the end of second quarter of FY 2018-19, EDF has invested Rs.53.52 crore in six

Daughter Funds, which in turn have made investments of Rs.177.37 crore in 47 Ventures/ Startups. Total Employment in supported Startups was around 4,200.

- (ix) Keeping  in  view  the  huge  domestic  requirement  on  account  of  roadmap  for  digitalization  of  the broadcasting sector, Indian Conditional Access System (iCAS) has been developed in Public-Private Partnership (PPP) mode to promote indigenous manufacturing of Set Top Boxes (STBs). The iCAS is available to domestic STB manufacturers at a price of USD 0.5 per license for a period of three years,  as  against  market  price  of  USD  3-5  per  license  for  other  competing  products.  The implementation of iCAS in the cable networks is underway.
- (x) 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'.
- (xi) An Electropreneur park has been set up in New Delhi for providing incubation for development of Electronic System Design & Manufacturing (ESDM) sector which will contribute IP creation and Product Development in the sector.
- (xii) National Centre of Excellence in Large Area Flexible Electronics (NCFLEX) has been set up in IITKanpur  with  the  objectives  to  promote  R&D;  Manufacturing;  Ecosystem;  Entrepreneurship; International  Partnerships  and  Human  Resources  and  develop  prototypes  in  collaboration  with industry for commercialization.
- (xiii) 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.
- (xiv) Centre  for  Excellence  on  Internet  of  Things  (IoT)  has  been  set  up  in  Bengaluru  jointly  with NASSCOM.
- (xv) An Incubation centre with focus on medical electronics has been set up at IIT-Patna.

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