Lok Sabha Question No. 1802 (UNSTARRED), answered on 2020-09-21
Subject: Incentives to Boost Electronic Sector
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Geetha Viswanath Vanga, Kotha Prabhakar  Reddy

## GOVERNMENT OF INDIA

## MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO. 1802 TO BE ANSWERED ON 21.09.2020

## INCENTIVES TO BOOST ELECTRONIC SECTOR

## 1802    SHRIMATI  VANGA  GEETHA VISWANATH: SHRI KOTHA PRABHAKAR REDDY:

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

- (a) the steps taken/being taken by the Government to give incentives to electronics sector to boost the market during pre-COVID-19 and post-COVID-19  period; and
- (b) the results yielded so far by  the said incentives?

## ANSWER

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

- (a): Steps taken by the Government to promote domestic electronics manufacturing, including the incentives,  are annexed. These inter-alia include  three  new  schemes,  viz.,  Production  Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing, Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme, notified on April 1, 2020.
- (b): As a result, the domestic production of electronic items has increased substantially from INR 1,90,366 crore in 2014-15 to INR 5,33,550 crore in 2019-20 at a Compound Annual Growth Rate (CAGR) of 23%.

PLI Scheme was open to receive applications till 31.07.2020. Under the PLI Scheme, a total of 22 applications have been received till 31.07.2020. Under SPECS Scheme, 13 applications have been received so far. Under EMC 2.0 Scheme, so far, one (01) application has been received.

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## Annexure

## 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  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 shall extend 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-01042020218992  dated  April  01,  2020  shall  provide  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  shall provide 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.
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 659 crore has been committed through EDF to 11 Daughter Funds with a targeted corpus of INR 5,500 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 (SKD) 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. 44 Product Categories have been notified under the CRO.
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.

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