Lok Sabha Question No. 3555 (UNSTARRED), answered on 2021-03-17
Subject: Domestic Manufactring of Electronics Components
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Rebati Tripura, Vijay Kumar Dubey, Anurag Sharma

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED  QUESTION NO. 3555

TO BE ANSWERED ON 17.03.2021

## DOMESTIC MANUFACTURING OF ELECTRONICS COMPONENTS

## 3555    SHRI REBATI TRIPURA: SHRI VIJAY KUMAR DUBEY: SHRI ANURAG SHARMA:

Will the Minister of Electronics and Information Technology be pleased to state:

- (a) whether the Government plans to increase the domestic manufacturing of electronic components in view of competition from other countries and if so, the details thereof;
- (b) the amount of revenue generated by the IT sector during each of the last three years; and
- (c) the steps taken/being taken by the Government to increase the revenue from the IT sector?

## ANSWER

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

- (a):      Government  intends  to  increase  the  domestic  manufacturing  of  electronic  components.  The steps taken by the Government to increase the domestic manufacturing of electronic goods, including electronic components, are at Annexure-1.
- (b):      As  per  the  National  Association  of  Software  and  Services  Companies  (NASSCOM),  the revenue generated by the IT-BPM sector in last 3 years is as under:
- (c):    The steps taken by the Government to increase the revenue from the IT sector are Annexure-2.

| FY      |   Revenue (USD Billion) |
|---------|-------------------------|
| 2017-18 |                     167 |
| 2018-19 |                     177 |
| 2019-20 |                     191 |

## Annexure

Steps  taken  by  the  Government  to  increase  the  domestic  manufacturing  of  electronic  goods,  includi electronic components

1. National Policy on Electronics 2019 : The National Policy on Electronics 2019 (NPE 2019) has been notifi on 25.02.2019. The vision of NPE 2019 is to position India as a global hub for Electronics System Design a Manufacturing (ESDM) by encouraging and driving capabilities in the country for developing core component 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  thr Schemes have been notified under the aegis of NPE 2019:

- (i) Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing notified vide Gazet Notification No.CG-DL-E-01042020-218990 dated April 01, 2020 provides an incentive of 4% to 6% to eligib companies on incremental sales (over base year) involved in mobile phone manufacturing and manufacturing specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units.
- (ii) Scheme  for  Promotion  of  Manufacturing  of  Electronic  Components  and  Semiconductors  (SPEC notified  vide  Gazette  Notification  No.CG-DL-E-01042020-218992  dated  April  01,  2020  provides  financi incentive of 25% on capital expenditure for the identified list of electronic goods that comprise downstream val chain of electronic products, i.e., electronic  components, semiconductor / display fabrication units, ATMP unit specialized sub-assemblies and capital goods for manufacture of aforesaid goods.
- (iii) Modified  Electronics  Manufacturing  Clusters  (EMC  2.0)  Scheme notified  vide  Gazette  Notificati No.CG-DL-E-01042020-218991 dated April 01, 2020 provides support for creation of world class infrastructu along with common facilities and amenities, including Ready Built Factory (RBF) sheds / Plug and Play faciliti for attracting major global electronics manufacturers along with their supply chain to set up units in the countr The  Scheme  provides  financial  assistance  for  setting  up  of  both  EMC  projects  and  Common  Facility  Centr (CFCs) across the country.
- (iv) Production Linked Incentive Scheme (PLI) for IT Hardware notified vide Gazette Notification No.CG-D E-03032021-225613 dated March 03, 2021 provides an incentive of 4% to 2% / 1% on net incremental sales (ov base year) of goods manufactured in India and covered under the target segment, to eligible companies, for a peri of four (4) years. The Target Segment under PLI Scheme includes (i) Laptops (ii) Tablets (iii) All-in-One PCs a (iv) Servers.
2. 100% FDI : As per extant Foreign Direct Investment (FDI) policy, FDI up-to 100% under the automatic rou is  permitted  for  electronics  manufacturing  (except  from  countries  sharing  land  border  with  India),  subject applicable laws / regulations; security and other conditions.
3. Modified Special  Incentive  Package  Scheme  (M-SIPS) :  The  Scheme  was  notified  on  27 th July,  2012 provide financial incentives to offset disability and attract investments in the electronics manufacturing sector. was amended in August, 2015 to extend the period of the scheme, enhance scope of the Scheme by including

more product verticals, and attract more investment. The scheme was further amended in January, 2017 to expedi the investments. The scheme provides subsidy for capital expenditure - 20% for investments in Special Econom Zones (SEZs) and 25% in non-SEZs. The incentives are available for 44 categories / verticals of electronic produc and  components  covering  entire  electronics  manufacturing  value  chain.  The  Scheme  was  open  to  recei applications till 31.12.2018 and is in the implementation mode.

Electronics  Manufacturing  Clusters  (EMC)  Scheme :  Electronics  Manufacturing  Clusters  Scheme  was d  on  22 nd October,  2012  to  provide  support  for  creation  of  world-class  infrastructure  along  with  common ies and amenities for attracting investment. Under the Scheme, 19 Greenfield EMCs and 3 Common Facility s (CFCs) measuring an area of 3,464 acres with total project cost of INR 3,743 crore including Government -in-Aid of INR 1,527 crore have been approved.

Electronics Development Fund (EDF) : Electronics Development Fund (EDF) has been set up as a 'Fund of ' to participate in professionally managed 'Daughter Funds' which in turn will provide risk capital to startups mpanies developing new technologies in the area of electronics and Information Technology (IT). This fund is ted to foster R&D and innovation in these technology sectors. INR 409 crore has been committed through EDF aughter Funds with a targeted corpus of INR 2,626 crore.

Phased Manufacturing Programme (PMP) has been notified to promote domestic value addition in mobile s and their sub-assemblies / parts manufacturing. As a result, India has rapidly started attracting investments is  sector  and  significant  manufacturing  capacities  have  been  set  up  in  the  country.  The  manufacturing  of e phones has been steadily moving from Semi Knocked Down (SKD) to Completely Knocked Down (CKD) thereby progressively increasing the domestic value addition.

Tariff  Structure has  been  rationalized  to  promote  domestic  manufacturing  of  electronic  goods,  including, lia, Cellular mobile phones, Televisions, Electronic components, Set Top Boxes for TV, LED products and al electronics equipment.

Exemption from Basic Customs Duty on capital goods : Notified capital goods for manufacture of specified nic goods are permitted for import at 'NIL' Basic Customs Duty.

- Simplified import of used plant and machinery : The import of used plant and machinery having a residual at least 5 years for use by the electronics manufacturing industry has been simplified through the amendment zardous  and  Other  Wastes  (Management  and  Transboundary  Movement)  Rules,  2016,  vide  Ministry  of nment, Forest and Climate Change Notification dated 11.06.2018.
- Relaxing the ageing restriction :  The  Department of Revenue vide Notification No.60/2018-Customs dated .2018 has amended the Notification No.158/95-Customs dated 14.11.1995, relaxing the ageing restriction from rs  to  7  years  for  specified  electronic  goods  manufactured  in  India  and  re-imported  into  India  for  repairs  or itioning.

Public  Procurement  (Preference  to  Make  in  India)  Order  2017 :  To  encourage  'Make  in  India'  and  to te  manufacturing  and  production  of  goods  and  services  in  India  with  a  view  to  enhancing  income  and yment, the Government has issued Public Procurement (Preference to Make in India) Order 2017 vide the tment for Promotion of Industry and Internal Trade (DPIIT) Order dated 15.06.2017 and subsequent revisions rders dated 28.05.2018, 29.05.2019, 04.06.2020 and 16.09.2020. In furtherance of the aforesaid Order, MeitY tified  mechanism  for  calculating  local  content  for  13  Electronic  Products  viz.,  (i)  Desktop  PCs,  (ii)  Thin s,  (iii)  Computer  Monitors,  (iv)  Laptop  PCs,  (v)  Tablet  PCs,  (vi)  Dot  Matrix  Printers,  (vii)  Contact  and ctless  Smart  Cards,  (viii)  LED  Products,  (ix)  Biometric  Access  Control  /  Authentication  Devices,  (x) tric  Finger  Print  Sensors,  (xi)  Biometric  Iris  Sensors,  (xii)  Servers,  and  (xiii)  Cellular  Mobile  Phones,  for rement to be made from locals suppliers.

Compulsory  Registration  Order  (CRO) :  MeitY  has  notified  'Electronics  and  Information  Technology (Requirement of Compulsory Registration) Order, 2012' for mandatory compliance to ensure safety of Indian s by curbing import of substandard and unsafe electronic goods into India. 63 Product Categories have been d under the CRO and the order is applicable on 44 product categories.

## Annexure-2

## Steps taken by the Government to increase the revenue from the IT sector

Ministry of Electronics and Information Technology (MeitY) has taken various initiatives and measures to encourage entrepreneurs to develop indigenous products in  ICT domain and also improve innovation-led ecosystem with technology and theme based incubation centres that may increase the revenue from the IT sector. A brief overview of such activities includes:

-  Technology  Incubation  and  Development  of  Entrepreneurs  (TIDE)  Scheme: Technology Incubation  and  Development  of  Entrepreneurs  (TIDE)  Scheme  was  put  in  place  by  MeitY  in  2008  to promote  innovation  by  nurturing  start-ups  in  Information  Technology,  Communications  &  Electronics (ICTE) domain. Under the TIDE Scheme, financial assistance is provided to Institutions of Higher Learning to  strengthen their Technology Incubation Centres for enabling  young entrepreneurs to create technology startup companies for commercial exploitation of technologies developed by them. Under the scheme, 27 TIDE Centres and 2 Virtual TIDE centres have been supported at institutes of higher learning all over India. The scheme had ended on 31 st March, 2020.
-  TIDE  2.0  Scheme: The  enhanced  version  of  TIDE  scheme  i.e.  Technology  Incubation  and Development  of  Entrepreneurs  (TIDE  2.0)  Scheme  was  initiated  in  the  year  2019  to  promote  tech entrepreneurship through financial and technical support to incubators engaged in supporting ICT startups using emerging technologies such as IoT, AI, Block-chain, Robotics etc. in seven pre-identified  areas of societal relevance. The Scheme is being implemented through 51 incubators through a three tiered structure with an overarching objective to promote incubation activities at institutes of higher learning and premier R&D organisations, eventually leading to handholding of approximately 2000 tech start-ups over a period of five years. As of now 51 TIDE 2.0 Incubation Centres have been approved and made operational pan India.
-  Support  for  International  Patent  Protection  in  E&IT  (SIP-EIT)  Scheme  for  SMEs: A significant initiative of MeitY is the SIP-EIT scheme which within a short span of time has become one of the flagship schemes of the ministry. SIP-EIT scheme provides financial support to MSMEs and tech startups for international patent filing so as to encourage innovation and recognize the value and capabilities of

global IP and establish competitive advantage. The scheme is for a period of 5 years with the mandate to support 200 international ICT patent applications. As of now, 67 applications from start-ups, MSMEs have been supported since the inception of the scheme. The scheme provides reimbursement upto a maximum of Rs.15  lakhs  per  invention  or  50%  of  the  total  expenses  incurred  in  filing  and  processing  of  patent application upto grant whichever is lesser.

-  Accelerator Programmes: Cohort based Accelerator Programmes offer an intensive, constructive, support  system  to  a  competitively  selected  group  of  cohort  firms  in  their  quest  for  self-reliance.  These business accelerator packages run by some of the best names in the industry specializing in speeding up the growth of start-up companies are bringing in seed investment, mentorship, industry connect and relevant components for transforming start-ups to worthy enterprises. The start-up accelerator programmes aims to support  and  scaling  up  the  start-ups  emerging  from  the  start-up  promotional  programmes  /  scheme  and helping  them  to  attain  success  by  cohort-based  programs  that  include  seed  investments,  connections, mentorship,  educational  components  to  accelerate  growth  etc.  MeitY  had  recently  approved  following cohort based 3 Accelerator Programmes so as to bring-in seed investment, mentorship, industry connect and relevant components.
- i. Start-up  to  Scale  up  Accelerator  by  The  GAIN, Bangalore: THE GAIN is a Growth Enabler o cross border start-ups and SMEs to access the India and global markets through mentoring and busines support. The whole program will consist of Two Cohort of 10 start-ups each for a period of six month with Primarily in the areas of health-tech and Edutech.
- ii. Scale up Programme by T-hub Foundation, Hyderabad: . T-Hub has been established to further th cause  of  start-up's  and  entrepreneurship  in  the  region.   This  accelerator  programme  consist  of  cohor programme of  12-15  start-ups  over  a  duration  of  one  year  involving  startups  in  the  area  of  electronic hardware manufacturing and agritech.
- . Bharat  Virtual  Accelerator  (BVA)  by  The  FinTech  Meetup  (TFM): TFM  run  India's  largest ntech Startup connect program 'The Fintech Yatra' and Fintech Accelerator 'Mumbai Fintech Accelerator'. e progamme have a single cohort programme to support 13 startups over a duration of one year in the area FinTech.
-  Centre of Excellence (CoE) on FinTech at Chennai: MeitY has initiated a Centre of Excellence (CoE)  on  FinTech  at  STPI,  Chennai  to  provide  infrastructure,  resources,  coaching  /  mentorship, technology support and funding to emerging start-ups in the FinTech sector. The proposed CoE would establish ecosystem around FinTech with the latest trends and technologies in the financial services sector through a collaborative approach including NPCI, UIDAI and Partner Banks. The purpose of the FinTech CoE  is  to  create  holistic  ecosystem  so  as  to  enable  start-ups  to  experiment  their  innovative  financial products or services within a well defined space and duration. The project aims to support 58 start-ups over a period of 5 years.
-  IOT OpenLab-a Centre of Excellence (CoE) for Internet of Things at STPI Bangalore: An IOT OpenLab - a Centre of Excellence (CoE) for Internet of Things in partnership with Arrow Electronics at STPI Bangalore has been initiated to provide academic and business mentoring of the start-ups in the IOT emerging technology area for developing products and / or services around IoT along with networking opportunities for the start-ups. The IoT OpenLab intends to support and nurture 100 start-ups per year with an overall target to support 500 start-ups over a period of 5 years.
-  ESDM  Incubation  Centre  at  Bhubaneswar  by  STPI: MeitY  has  approved  ESDM  Incubation Centre 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.  The  centre  will  be  operated  through STPI,  Odisha  in  collaboration  with  Government  of  Odisha,  IIIT  Bhubaneswar  and  IESA.  It  aims  to leverage  40  start-ups  over  the  period  of  5  years.  This  eco-system  is  necessary  to  develop,  promote,

incubate, mentor and create breakthrough innovations towards development of product and IP creation in the ESDM sector.

-  Centre of Excellence (CoE) on Medi-Electronics & Health Informatics at Lucknow: MeitY has initiated  a  Centre  of  Excellence  (CoE)  on  Medi-Electronics  &  Health  Informatics  at  Lucknow  to stimulate the establishment and growth of technology-based start-ups in the field of medical electronics and health informatics by providing the necessary infrastructure, mentoring, marketing, funding and ecosystem required for their success and growth. The Medi-Electronics & Health Informatics CoE is being setup at SGPGI, Lucknow with Department of IT and Electronics, UP Govt. as funding partner, AiMED as  industry  partner,  AMTZ  as  industry  and  seed  funding  partner  and  Kalam  Institute  of  Health Technology as academic partner. The project aims to support 50 start-ups over a period of 5 years.
-  Establishment  of  Incubator  for  Electronics  Start-ups  in  Delhi-NCR  (Electropreneur  Park): The Electropreneur Park established in collaboration with Software Technology Parks of India (STPI), India Electronics & Semiconductor Association (IESA) and Delhi University (DU) with state of the art facilities at South Campus, Delhi University. The project aims to support 50 start-ups.
-  Electronics Incubator by IIITM-Kerala and KSUM at Cochin, Kerala: The project for setting up of Consumer Electronics Incubator at Cochin, Kerala by Indian Institute of Information Technology and Management Kerala (IIITM-K) and M/s Kerala Startup Mission (KSUM) aims to creation of new enterprises focused on Consumer Electronics through a holistic incubation ecosystem. This Incubator will incubate 40 startups over a period of 4 years.
-  Setting up of Incubation Centre in the area of ESDM with focus on Medical Electronics at IIT Patna: The  incubation  facility  developed  through  MeitY  and  State  Government  partnership  aims  to incubate 50 startups over a period of 5 years. The primary objective of this is to promote innovation and entrepreneurship with the aim to identify, nurture and translate technological ideas and innovation in the broad area of ESDM sector with a focus in Medical Electronics.
-  Fabless chip design incubation centre at IIT Hyderabad: The objective of the fabless chip design incubator is to incubate start-ups in semiconductor design. The vision is to provide one-stop service to start-ups intending to enter this space. This Incubator will incubate 50 start-ups over a period of 5 years.
-  Industry  Innovation  Programme  on  Medical  Electronics  through  BIRAC: With  an  aim  to promote  scientific  and  technological  research  in  Medical  Electronics  sector  and  to  address  the  pressing challenges  associated  with  the  development  of  innovative  medical  electronics  and  making  it  available, accessible  and  affordable  to  the  people  at  the  bottom  of  the  pyramid,  a  project  has  been  initiated  at Biotechnology  Industry  Research  Assistance  Council  (BIRAC).  Under  this  program  support  will  be provided at Seed or idea to PoC, Early transition and transitions to scale stages.
-  National Policy on Software Products: Government has approved the National Policy on Software Products-2019  on  February  28,  2019  with  an  aim  to  develop  India  as  the  global  software  product  hub, driven  by  innovation,  improved  commercialisation,  sustainable  Intellectual  property  (IP),  promoting technology start-ups and specialised skill sets, for development of the sector, based on ICT. The objective of the policy is to create a robust Indian Software Product development ecosystem leading to ten-fold increase in India share of the Global Software product market and so as to generate direct and in-direct employment for 3.5 million people by 2025. The salient features of the Policy are as follows:
- i. To promote creation of a sustainable software product industry leveraging India's strength in IT so as to create disruptive innovations and cutting edge technologies.
- ii. To  build  domestic  market  and  leverage  the  Software  Products  to  increase  productivity  of  Indian SMEs thus raising their competitiveness.
- iii. To create a software product ecosystem for transforming social sectors like healthcare, education, agriculture, rural and urban infrastructure.
- iv. To support the software product industry by way of ease of doing business enhanced market access and improved R&D and innovation ecosystem.
- v. To create a specialized talent pool conversant with nuances of software product development that can support the growth of software product industry.

*********