Lok Sabha Question No. 1547 (UNSTARRED), answered on 2019-11-27
Subject: Investment in Electronics Manufacturing Sector
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Dayakar Pasunoori

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO. 1547 TO BE ANSWERED ON 27.11.2019

## INVESTMENT IN ELECTRONICS MANUFACTURING SECTOR

## 1547    SHRI PASUNOORI   DAYAKAR:

Will the Minister of Electronic and Information technology be pleased to state:-

- (a)   whether the Government has held any meeting with Chief Executive Officers (CEO) of nearly 50 firms to discuss industrial concern pertaining to boosting of investment in electronic manufacturing in the country and if so, the details and outcomes thereof;
- (b)    whether  the  Government  has  received  any  investment  plans/commitment  from  these  firms  and  if  so,  the details and the status thereof; and
- (c)  whether the Government has approved the National Electronics Policy 2019 aimed at achieving a turnover of $400 billion for the Electronics System Design and Manufacturing (ESDM) sector by the year 2025 and if so, the details thereof and targets achieved in this regard so far?

## ANSWER

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

(a):    A  roundtable  meeting  under  the  chairmanship  of  Hon'bleMinister  of Electronics  and  Information Technologywas organised with the CEOs and representatives of 54 electronics sector firms on 16.09.2019. The objective  of  the  meeting  was  to  recognize  the  key  challenges  being  faced  by  the  Industry,  opportunities  and expectations of the industry from the Government. The companies from different verticals of electronics sector such  as  mobile  handsets,  consumer  electronics,  strategic  electronics,  medical  devices,  information  technology, electronics  manufacturing services,  electronic  components, telecom and LED lighting participated in the round table meeting.

The  major  concerns  raised/suggestions  received  from  the  participating  companies, inter-alia, included  the following:

-  High rate of Corporate Income Tax is a cause of concern.
-  Need for competitive export incentives, including formulating a new scheme in lieu of Merchandise Export from India Scheme (MEIS).
-  Lack of component manufacturing eco-system is a concern for increasing value addition.
-  Income tax holiday for 10 years on exports.
-  Need to withdraw 5% Basic Customs Duty (BCD) on import of Open Cells required formanufacturing of Panels of TVs.
-  Need for Phased Manufacturing Programme (PMP)in other verticals of electronics.
-  Need to extend or introduce a new scheme like Modified Special Incentive Package Scheme (M-SIPS).

Following policy announcements made by Government, post the round table meeting, shall promote electronics manufacturing Industry:

-  Reduction of Corporate Income Tax rates
-  Exemption of BCD on Open Cell for manufacture of Panels of TVs

The details are given in the Annexure I and 2.

(b):   Under the M-SIPS, investment proposals worth INR 40,362 crores have been received from 26 firms, which participated in the aforesaid round table meeting. Many of these firms and their supply chain partners have shown commitment to setup their manufacturing facilities in India.

- (c):  The Government has notified the National Policy on Electronics 2019 (NPE 2019) on 25.02.2019, with the vision to position India as a global hub for Electronics System Design and Manufacturing (ESDM) and create an enabling environment for the industry to compete globally.

The salient features of NPE 2019 and the steps taken under NPE 2019 to position India as a global hub for ESDM are at Annexure  1 and 2 respectively.

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## Salient features of the National Policy on Electronics 2019 (NPE 2019)

The salient features of NPE 2019 inter-alia include:

- (a) Promote domestic manufacturing and export in the entire  value-chain of ESDM for economic development to achieve a turnover of USD 400 billion by 2025.
- (b) Creating eco-system for globally competitive ESDM sector
- (c) Promotion of electronic components manufacturing ecosystem
- (d) Special  package  of  incentives  for  Mega  Projects  which  are  extremely  high-tech  and  entail  huge  investments,  such  as semiconductor facilities (including trusted foundries), display fabrication, photonics and LED chip fabrication units
- (e) Encouraging Industry-led R&D and innovation and promoting start-up eco-system in all sub-sectors of electronics, including 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, Nanobased devices, as well as thrust areas such as medical electronics, defence and strategic electronics, automotive electronics, cyber security, power electronics and automation
- (f) Providing incentives and support for significantly enhancing availability of skilled manpower, including re-skilling, in the ESDM sector
- (g) Promoting 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
- (h) Emphasis  on  Cyber  Security  and  promoting  trusted  electronics  value  chain  initiatives  to  improve  India's  national  cyber security profile
- (i) Providing special support for developing core competencies in the following sub-sectors of Electronics:
-  Fabless Chip Design Industry
-  Medical Electronic Devices Industry
-  Automotive Electronics Industry and Power Electronics for Mobility
-  Strategic Electronics Industry
- (j) Creation of Sovereign Patent Fund (SPF) to promote the development and acquisition of IPs in ESDM sector

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## Steps taken under NPE 2019 to position India as a global hub for ESDM

## 1. Reduction of Corporate Income Tax rates

Domestic companies can now opt for concessional tax regime @22% (25.17% inclusive of surcharge and cess) provided that such a company  has  not  claimed  any  income  tax  incentive  or  exemption.  Such  companies  will  also  not  be  liable  to  pay  Minimum Alternate Tax (MAT). Further, to attract fresh investments in manufacturing and boost Make in India programme, new provision has  been  made  which  allows  new  domestic  companies  incorporated  on  or  after  October  1,  2019,  making  fresh  investment  in manufacturing,  and  starting  operations  before  March  31,  2023,  an  option  to  pay  corporate  income  tax  at  15  per  cent  (17.16% inclusive of surcharge and cess). Such company cannot avail any other income tax exemption/ incentive under the Income-Tax Act. Such companies will also not be liable to pay Minimum Alternate Tax (MAT).

MAT rate for companies availing exemptions/incentives has been reduced from 18.5% to 15%.

## 2. Exemption of BCD on Open Cell for manufacture of Panels of TVs

To promote domestic manufacturing of TV Panels, the BCD levied on Open Cell (15.6' and above) for use in the manufacture of Liquid  Crystal  Display  (LCD)  and  Light  Emitting  Diode  (LED)  TV  Panels  has  been  reduced  to  Nil  from  5%  vide  Customs Notification  No.30/2019 dated 17.09.2019 till  September  2020.  Also,  BCD has been exempted on  following  inputs to promote domestic manufacturing of Open Cells:

-  Chip on Film
-  Printed Circuit Board Assembly (PCBA)
-  Cell (glass board/substrate)
3. Exemption of Basic Customs Duty (BCD) on capital goods for the manufacture of specified electronic goods

Annexure -1

Annexure-2

In the Union Budget 2019-20, BCD has been exempted on specified capital goods [falling under Chapter 82, 84, 85 and 90] for the manufacture of specified electronic goods such as Printed Circuit Board (PCB), Charger of cellular mobile phones, Display Panel, etc., subject to actual user condition, with the objective of increasing competitiveness of the industry.

## 4 . Efforts for promotion of investments in electronics manufacturing

Various  efforts  have  been  made  by  Ministry  of  Electronics  and  Information  Technology  (MeitY)  to  attract  Indian  and  foreign companies in various countries to invest in electronics sector. In this regard, recently, Secretary, MeitY led a Government-Industry delegation  to  Taiwan,  during  October  15  -  18,  2019,for  promotion  of  investment  in  electronics  manufacturing  sector  and participation in TAITRONICS 2019. During the visit Secretary, MeitY had one-on-one meetings with electronics manufacturing companies, viz ., Sercomm, Foxlink, Foxconn, Nanya Plastics, Passive System Alliance, Wistron and Tripod.

A round table meeting under the chairmanship of Hon'ble Minister of Electronics and Information Technology was organised with the key leaders of Electronics Industry on 16.09.2019.

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