Lok Sabha Question No. 1592 (UNSTARRED), answered on 2021-07-28
Subject: Reducing of Dependence on Chinese Electronic Items
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Malook Nagar

## GOVERNMENTOFINDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA

## UNSTARRED  QUESTION NO.1592

TO BE ANSWERED ON 28.07.2021

## REDUCTION OF DEPENDENCE ON CHINESE ELECTRONIC ITEMS

## 1592.      SHRI MALOOK NAGAR:

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

- (a) whether the Government proposes to implement any scheme to reduce dependence on Chinese electronic items in the country and if so, the details thereof, State/UT-wise; and
- (b) the policies of the Government to provide electronic items at reduced or same rate as that of Chinese electronic products?

## ANSWER

## MINISTER  OF STATE  FOR  ELECTRONICS  AND INFORMATION TECHNOLOGY (SHRI RAJEEV CHANDRASEKHAR)

(a) : Government  has taken strategic steps and initiatives to expand the electronics manufacturing sector in the country and make India a global electronics manufacturing hub. As a consequence, the dependence on imports of Chinese / other countries electronic goods will go down significantly. Government has launched Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing under the aegis of National Policy on Electronics 2019 (NPE  2019)  on  April  1,  2020.  The  Scheme  extends  incentive  from  4%  to  6%  to  eligible companies on incremental sales (over base year) involved in mobile phone manufacturing and manufacturing of specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units, for a period of five years.

The  objective  of  PLI  for  Large  Scale  Electronics  Manufacturing  is  to  boost  domestic manufacturing and attract large investments in the electronics value chain including mobile phones, electronic components and semiconductor packaging.

Subsequently, the Production Linked Incentive Scheme(PLI) for IT Hardware has been notified on  March  3,  2021.  The  scheme  is  likely  to  benefit    major  global  as  well  as  domestic manufacturers of IT hardware products i.e. Laptops, Tablets, All-in-One PCs, and Servers. The PLI Scheme for IT Hardware shall extend incentive of 4% to 2% / 1% on net incremental sales (over base year, i.e.  2019-20) of goods manufactured in India  and covered under the target segment, to eligible companies for a period of four (4) years.

- (b) : The steps taken by the Government to promote domestic electronics manufacturing with

the objective of providing electronic items at competitive rates is annexed.

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## Annexure

## Steps  taken  by  the  Government  to  promote  domestic  electronics  manufacturing

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.

To attract  and  incentivize  large  investments  in  the  electronics  value  chain  and  promote exports, following three Schemes have been notified under the aegis of NPE 2019:

- (i) Production  Linked  Incentive  Scheme  (PLI)  for  Large  Scale  Electronics Manufacturing notified vide Gazette Notification No.CG-DL-E-01042020-218990 dated April 01, 2020 provides an  incentive of 4% to 6% to eligible companies on incremental  sales  (over  base  year)  involved  in  mobile  phone  manufacturing  and manufacturing  of  specified  electronic  components,  including  Assembly,  Testing, Marking and Packaging (ATMP) units.

After the success of the First Round of Production Linked Incentive Scheme  in attracting  investments  in  mobile  phone  and electronic component manufacturing, Second Round of the  PLI Scheme for Large Scale Electronics Manufacturing was launched on 11.03.2021 for incentivising Electronic  Components.  Under the Second Round, incentives of 5% to 3% shall be extended on incremental sales (over base year i.e.  2019-20)  of  goods  manufactured  in  India  and  covered  under  the  target segment, to eligible companies, for a period of four (4) years.

- (ii) Scheme  for  Promotion  of  Manufacturing  of  Electronic  Components  and Semiconductors (SPECS) notified vide Gazette Notification  No.CG-DL-E01042020-218992 dated April  01, 2020 provides financial incentive of 25% on capital expenditure for the identified list of 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.
- (iii) Modified  Electronics Manufacturing Clusters (EMC 2.0)  Scheme notified vide  Gazette  Notification  No.CG-DL-E-  01042020-218991  dated  April  01,  2020 provides  support  for  creation  of  world  class  infrastructure  along  with  common facilities and amenities, including Ready Built Factory (RBF) sheds / Plug and Play

facilities  for  attracting  major  global  electronics  manufacturers  along  with  their supply  chain  to  set  up units in the country. The Scheme provides financial  assistance for setting up of both EMC projects and Common Facility Centres (CFCs) across the country.

- (iv) Production  Linked  Incentive  Scheme  (PLI)  for  IT  Hardware notified  vide Gazette  Notification  No.  CG-DL-E-03032021-  225613 dated  March  03,  2021 provides of 4% to 2% / 1% on net incremental  sales  (over  base  year)  of  goods manufactured  in India and covered under the target segment, to eligible companies, for a period of four (4) years. The Target Segment under PLI Scheme includes (i) Laptops (ii) Tablets (iii) All-in- One PCs and (iv) Servers.
2. 100% FDI : As per extant Foreign Direct Investment (FDI) policy, FDI up-to 100% under the  automatic  route  is  permitted  for  electronics  manufacturing  (except  from  countries sharing land border with India), subject to applicable laws / regulations; security and other conditions.
3. Modified  Special  Incentive  Package  Scheme  (M-SIPS) :To offset disability and attract investment in Electronic System Design  and Manufacturing(ESDM) sector, M-SIPS was approved in July 2012. Revisions were made in the scheme in 2015 by expanding its scope and  adding  new  product  categories  accompanied  by  simplification  of  procedures.  The scheme provides 20-25% of capex subsidy on investment made in the first 5 years of the project  (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. Most of the projects approved under the scheme are in the implementation mode. So far, 306 units with an investment of INR 83,895 crore and committed incentives of INR  9,049 crore have been approved. Incentives amounting to INR 1,203.77 crore have been disbursed. Out of 306 units approved, 237 units have invested INR 26,799  crore  and  207  units  have  started  production.  Direct  and  indirect  employment generated  so  far  is  2,52,783.  Total  sales  (domestic  and  exports)  from  the  units  under production are INR 3,70,242 crore which include export of  INR 45,808 crore.
4. Electronics  Manufacturing  Clusters  (EMC)  Scheme : Electronics Manufacturing Clusters  Scheme  was  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,  19  Greenfield  EMCs  and  3  Common  Facility  Centres (CFCs)  measuring  an  area  of  3,464  acres  with  total  project  cost  of  INR  3,743  crore including Government Grant-in-Aid of INR 1,527 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 409 crore has been committed through EDF to 9 Daughter Funds with a targeted corpus of INR 2,626 crore.
6. Phased Manufacturing Programme (PMP) has been notified to promote domestic value addition in mobile phones and their sub-assemblies / parts 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 phones has been steadily moving from Semi Knocked Down (SKD) to Completely Knocked  Down (CKD) 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 phones, 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 2017 : 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 Orders dated 28.05.2018, 29.05.2019,  04.06.2020 and 16.09.2020. In furtherance of the  aforesaid  Order,  MeitY  has  notified  mechanism  for  calculating  local  content  for  13 Electronic Products viz., (i) Desktop PCs, (ii) Thin Clients, (iii) Computer Monitors, (iv) Laptop PCs, (v) Tablet  PCs, (vi) Dot Matrix Printers, (vii) Contact and Contactless Smart Cards, (viii) LED Products, (ix) Biometric Access Control / Authentication Devices, (x) Biometric Finger Print Sensors, (xi) Biometric Iris Sensors, (xii) Servers, and (xiii) Cellular Mobile Phones, for procurement to be made from locals suppliers.
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. 63 Product Categories have been  notified  under  the  CRO  and the  order  is  applicable  on 44 product categories.
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