Lok Sabha Question No. 2530 (UNSTARRED), answered on 2018-12-26
Subject: Manufacturing of Electronic Products
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: AJAY (TENI) MISRA

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED  QUESTION NO.2530

TO BE ANSWERED ON 26.12.2018

## MANUFACTURING OF ELECTRONIC PRODUCTS

## 2530.    SHRI AJAY MISRA TENI:

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

- (a) whether the manufacturing of electronic products particularly of mobile handsets have declined due to lack of clear cut export policy in the country;
- (b) if so, whether there is a need not only to expand the component industry and prepare its eco-system but also to promote handset export to give it a boost; and
- (c) if so, the necessary steps taken by the Government in this regard?

## ANSWER

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

(a),  (b)  and  (c):    As  a  result  of  various  measures taken by the Government over the last few years, manufacturing of electronic products, including cellular mobile handsets, 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%. The production of cellular mobile handsets reached approx. INR 1,32,000 crore in 2017-18, compared to INR 18,900 crore in 2014-15. Production of cellular mobile handsets in volume terms reached 22.5 crore units in 2017-18, as compared to production of 6.0 crore units in 2014-15.

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  domestic  manufacturing and export of electronic goods. These are listed at Annexure .

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## Annexure Steps taken by the Government for promotion of domestic manufacturing and export of electronic goods

- (i) Modified Special Incentive Package Scheme (MSIPS) provides financial incentives to offset disability and attract investments  in  the  Electronics  Systems  Design  and  Manufacturing  (ESDM)  sector.  The  scheme  is  available  for both new projects and expansion projects, and is open to receive applications till 31.12.2018.
- (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 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.
- (iii) 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.
- (iv) 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.
- (v) 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.
- (vi) 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.
- (vii) Notified  capital  goods  for  manufacture  of  specified  electronic  goods  are  permitted  for  import  at  "Nil"  Basic Customs Duty.
- (viii) 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

- (ix) 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.
- (x) 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.
- (xi) 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'.
- (xii) 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.
- (xiii) 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.
- (xiv) 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.
- (xv) Centre for Excellence on Internet of Things (IoT) has been set up in Bengaluru jointly with NASSCOM.
- (xvi) An Incubation centre with focus on medical electronics has been set up at IIT-Patna.

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