Lok Sabha Question No. 155 (STARRED), answered on 2019-02-13
Subject: Special Packages to Boost Electronics Export
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: SUKENDER REDDY GUTHA

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA STARRED QUESTION NO.*155

TO BE ANSWERED ON 13.02.2019

## SPECIAL PACKAGES TO BOOST ELECTRONICS EXPORT

## *155.    SHRI GUTHA SUKENDER REDDY:

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

- (a) the details of the incentives being given to the electronic industry and those included in the National Electronics Policy;
- (b) whether  the  Government  is  proposing  to  announce  special  packages  to  boost  the electronics export and remove the hindrances in such export as a part of facilitating the ease of doing business programme; and
- (c) if so, the details thereof?

## ANSWER

MINISTER OF ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI RAVI SHANKAR PRASAD)

- (a) to (c):    A statement is laid on the Table of the House.

## STATEMENT REFERRED TO IN REPLY TO LOK SABHA STARRED QUESTION NO.*155 FOR 13.02.2019 REGARDING SPECIAL PACKAGES TO BOOST ELECTRONICS EXPORT

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- (a): The details of incentives being given to the electronics industry and steps taken by the Government  for  promotion  of  electronics  manufacturing  in  the  country  are  listed  at Annexure. The incentives given under the aegis of National Electronics Policy (NPE) 2012 inter-alia include the following:
- (i) Modified  Special  Incentive  Package  Scheme  (M-SIPS)  for  providing  financial incentives  to  offset  disability  and  attract  investments  in  the  Electronics  System Design and Manufacturing (ESDM) sector.
- (ii) Electronics  Manufacturing  Clusters  (EMC)  Scheme  for  providing  financial support  for  creation  of  state-of-art  infrastructure  for  electronics  manufacturing units.
- (iii) 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.
- (iv) Tariff rationalization, including the Phased Manufacturing Programme (PMP) for promotion  of  domestic  manufacturing  of  mobile  handsets  and  sub-assemblies/ parts thereof.
- (b)  and  (c):  The  following  package  of  incentives  has  been  made  available  for  promoting indigenization and export of electronics:
- (i) Procedural simplification for import of second hand manufacturing plant and machinery :  Ministry  of  Environment,  Forests  and  Climate  Change  (MoEF&CC) vide  Notification  dated  11.06.2018  has  simplified  the  import  of  used  plant  and machinery  having  a  residual  life  of  at  least  5  years  for  use  by  the  electronics manufacturing  industry  through  the  amendment  of  Hazardous  and  Other  Wastes (Management and Transboundary Movement) Rules, 2016.
- (ii) Support for Brand-building and promoting investment in electronics manufacturing  and  export  of  electronic  goods :  Department  of  Commerce  will support promotion of sector specific visits under the Market Access Initiative (MAI) Scheme for ESDM and the India Brand Equity Fund (IBEF) would assist MeitY in promoting the Brand India Label in the ESDM sector in overseas market.
- (iii) Expanding  the  list  of  capital  goods  required  for  manufacture  of  electronic goods for Basic Customs Duty (BCD) exemption : An additional list of 36 capital goods, not manufactured in India, required for manufacture of specified electronic goods has been notified by the Department of Revenue vide Notification No.71/2018-Customs dated 28.09.2018. This  helps to reduce capital expenditure for setting up/ expansion of existing units and address the disabilities to a certain extent.
- (iv) Enhancement of incentive under the Merchandise Exports from India Scheme (MEIS) for electronic goods : In order to give a boost to electronics exports, MEIS rate has been enhanced from 2% to 4% for several electronic goods, covering interalia telecom  equipment,  including  cellular  mobile  phones;  electronic  components; electronic  integrated  circuits;  transmission  apparatus  for  radio  broadcasting  or

television; radio broadcast receivers, radar apparatus and indicator panels incorporating LCD or LED. (v) Relaxation  of  ageing  restriction  imposed  for  duty  free  import  of  electronic goods for repair or reconditioning, from 3 years to 7 years :  The Department of Revenue  vide  Notification  No.60/2018-Customs  dated  11.09.2018  has  relaxed  the ageing  restriction  for  specified  electronic  goods  manufactured  in  India  and  reimported into India for repairs or for reconditioning.

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

- (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,  including  electronic  components. The  scheme  is  applicable  for  both  new  projects  and  expansion  projects,  and  was  open  to  receive  applications  till 31.12.2018.
- (ii) The Electronics Manufacturing Clusters (EMC) Scheme was notified to provide financial support for creation of stateof-art infrastructure for electronics manufacturing units. The scheme was open for receipt of application for a period of 5 years, i.e., upto 21 st 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.  .
- (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.
- (iv) To  promote  domestic  value  addition  in  mobile  handsets  and  their  sub-assemblies/  parts  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 sub-assemblies/ parts has been steadily moving from Semi Knocked Down (SKD) to Completely Knocked Down (SKD) level, thereby progressively increasing the domestic value addition.
- (v) 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.
- (vi) 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.
- (vii) 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.
- (viii) Notified capital goods for manufacture of specified electronic goods are permitted for import at 'Nil' Basic Customs Duty.
- (ix) 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

- (x) 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.
- (xi) 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.
- (xii) 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'.
- (xiii) An Electropreneur park has been set up in New Delhi for providing incubation for development of Electronics System Design and Manufacturing (ESDM) sector which will contribute IP creation and Product development in the sector.

## Annexure

- (xiv) 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.
- (xv) 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.
- (xvi) Centre  for  Excellence  (COE)  for  Internet  of  Things  (IoT)  has  been  set  up  in  Bengaluru  and  Gurugram  jointly  with NASSCOM.
- (xvii) An Incubation centre with focus on medical electronics has been set up at IIT-Patna.

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