Lok Sabha Question No. 2947 (UNSTARRED), answered on 2020-03-11
Subject: Electronics System Design and Manufacturing
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Anurag Sharma

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO.2947

TO BE ANSWERED ON 11.03.2020

## ELECTRONICS SYSTEM DESIGN  AND MANUFACTURING

## 2947.   SHRI ANURAG SHARMA:

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

- (a) the  steps  taken/being taken by the Government for creating  a favourable atmosphere for competitive Electronics System Design and Manufacturing (ESDM) sector on global level under National Electronics Policy 2019;
- (b) the details of incentives  and assistance given/being given  by  the  Government  for manufacturing of major electronics parts in the country;
- (c) whether the Government proposes to provide any special package to encourage super mega hightech projects in the country, and if so, the details thereof; and
- (d) the  action  plan  formulated  by  the  Government  to  promote  industry  led  research  and development in all areas of electronics?

## ANSWER

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

(a), (b) and (c): The Government attaches high priority to electronics hardware manufacturing and it is one of the important pillars of both 'Make in India' and 'Digital India' programmes.

In  recent years,  Government  has  taken  several  initiatives  for  promotion  of  electronics manufacturing in the country, as a result of which the domestic production of electronic goods has increased substantially from Rs.1,90,366 crore (USD 29 billion) in 2014-15 to an estimated Rs.4,58,006 crore (USD 70 billion) in 2018-19, at a Compound Annual Growth Rate (CAGR) of about 25%.

Tariff  Structure  has  also  been  rationalized  to  promote  domestic  production  of  consumer electronic  items,  including  inter-alia,  Cellular  Mobile  Handsets,  Televisions,  Set  Top  Boxes and  LED  lighting  products.  Steps  taken  by  the  Government  for  promotion  of  electronics manufacturing in the country are at Annexure-I.

The National Policy on Electronics 2019 (NPE 2019) has been notified 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. One of the objectives of NPE 2019 is to promote domestic manufacturing and export in the entire valuechain  of  ESDM  for  economic  development  to  achieve  a  turnover  of  USD  400  billion (approximately  INR  26,00,000  crore)  by  2025.  This  will  include  targeted  production  of  1.0 billion (100 crore) mobile handsets by 2025, valued at USD 190 billion (approximately INR

- 13,00,000 crore), including 600 million (60 crore) mobile handsets valued at USD 110 billion (approximately INR 7,00,000 crore) for export.

In  order  to  achieve  the  aforesaid  objective  of  NPE  2019,  Ministry  of  Electronics  and Information Technology (MeitY) has formulated the following schemes to incentivize domestic electronics  manufacturing  and  enable  the  big  electronics  manufacturing  firms  to  set  up  their global supply chains in the country. These Schemes are presently under consideration of the Government:

- (i) Production Linked Incentive (PLI) Schemefor Large Scale Electronics Manufacturing: The  scheme  proposes  to  provide  production  linked  incentive of    4  -6%    on  incremental    sales    of    specific    categories    of    electronic    goods manufactured    in  India,      viz.,      Mobile      phones,      Specified      electronic components,   including Assembly, Testing, Marking and Packaging (ATMP) units.
- (ii) Scheme for Promotion of manufacturing of Electronics Components and Semiconductors (SPECS): The  scheme  proposes  to  provide  financial  incentive of    25%    on    capital  expenditure  for  theidentified  listof  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.
- (d):      Based  on  the  Action  Plan  formulated  by  MeitY  to  implement  the  strategies  identified under  National  Policy  on  Electronics  (NPE)  2019,  Task  Force  has  been  constituted  for promotion  of  Fabless  Chip  Design  in  the  country.  The  first  meeting  of  Task  Force  for promotion of Fabless Chip Design was held on 24th January, 2020 to seek the recommendation  for  implementing  the  strategy  of  NPE  2019.  The  composition  of  the  Task Force is at Annexure-II. Based on the recommendations of the Task Force the roadmap for creation of Fabless Ecosystem in the country would be implemented including promotion of industry-led Research and Development in all areas of electronics .

The  following  Centres  of  Excellence  (CoE)  have  been  established  to  promote  R&D  in electronics in collaboration with the industry:

1. National Centre of Excellence in Large Area Flexible Electronics (NCFLEX) has been set  up  in  IIT-Kanpur  with  the  objective  to  promote  R&D;  Manufacturing;  Ecosystem; Entrepreneurship; International Partnerships and Human Resources and develop prototypes in collaboration with industry for commercialization.
2. 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.
3. National  Centre  of  Excellence  for  Next  Generation  AMOLED  Displays ,  OLED Lighting and OPV Products has been set up at IIT-Madras with the objective to collaborate with  industry  to  develop  next-generation,  state-of-the-art,  high-volume  and  cost  effective electronic components.
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## Steps taken by the Government for promotion of electronics manufacturing

Following steps have been taken by Government to promote electronic hardware manufacturing in India:

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.
2. 100% FDI: As per extant Foreign Direct Investment (FDI) policy, FDI up-to 100% under the automatic route is permitted for electronics manufacturing, subject to applicable laws/ regulations; security and other conditions.
3.   Modified Special Incentive Package Scheme (M-SIPS): The scheme was notified on 27th July, 2012 to provide financial incentives to offset disability and attract investments in the electronics manufacturing sector. It has been 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 Cluster Scheme has been 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  parts  /  components  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  and  their  parts  /  components  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.60/2018-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.
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 Order dated 28.05.2018 and 29.05.2019. In furtherance of the aforesaid  Order,  MeitY  has  notified  11  Electronic  Products  viz.,  Desktop  PCs,  Laptop PCs,  Tablet  PCs,  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  14.09.2017  and Cellular Mobile Phones vide Notification dated 01.08.2018.
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.

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