Lok Sabha Question No. 1053 (UNSTARRED), answered on 2023-02-08
Subject: Domestic Production of Electronic Products
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Jayant Sinha

## GOVERNMENT OF INDIA

## MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED  QUESTION NO. 1053

TO BE ANSWERED ON:  08.02.2023

## DOMESTIC PRODUCTION OF ELECTRONIC PRODUCTS

## 1053.  SHRI JAYANT SINHA:

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

- (a) the details of size of the electronic manufacturing sector in terms of domestic production, exports and imports, year-wise for the last five years;
- (b) the share of Jharkhand in domestic production, exports and imports for the corresponding years; and
- (c)  the  steps  taken  by  the  Government  to  make  India  into  a  global  hub  of  electronic manufacturing?

## ANSWER

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

- (a):  As per data received from industry associations, India's production of electronics is Rs. 640,810  crore  in  2021-22.  The  details  of  the  production,  import  and  export  of  electronic goods over the last five years is as under:

(Values in INR Crore)

|             | 2017-18   | 2018-19   | 2019-20   | 2020-21   | 2021-22   |
|-------------|-----------|-----------|-----------|-----------|-----------|
| Production* | 3,88,306  | 4,58,006  | 5,33,550  | 5,54,461  | 6,40,810  |
| Imports**   | 3,40,901  | 4,01,450  | 3,85,081  | 3,99,374  | 5,09,679  |
| Exports**   | 41,220    | 61,908    | 82,929    | 81,822    | 109,797   |

* Source: MeitY Annual Reportand Industry Associations

** Source: Directorate General of Commercial Intelligence and Statistics (DGCI&S)

- (b):    The  details  of  export  of  electronic  good  from  Jharkhand  in  last  five  years  is  placed herewith:

(Values in INR crore)

| Exports from   |   2017-18 |   2018-19 |   2019-20 |   2020-21 |   2021-22 |
|----------------|-----------|-----------|-----------|-----------|-----------|
| Jharkhand      |     28.83 |      8.35 |      9.71 |      8.08 |     18.21 |

Source: Directorate General of Commercial Intelligence and Statistics (DGCI&S)

The  information  with  respect  to  domestic  production  and  import  of  electronic  goods  from Jharkhand is not available.

- (c):    Government  of  India's  goal  is  to  broaden  and  deepen  the  country's  electronic manufacturing ecosystem. At this juncture, National Policy on Electronics 2019 (NPE 2019) envisions positioning 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.

In  order  to  boost  electronics  manufacturing  including  semiconductors  in  the  country  and incentivize  large  investments  in  the  electronics  value  chain  as  well  as  promote  exports, following incentives under the Schemes have been notified:

- i. Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing was notified on 1st April, 2020. PLI Scheme extends an incentive of 6% to 4% on incremental sales (over base year) of goods under target segments that are  manufactured  in  India  to  eligible  companies,  for  a  period  of  five  (5)  years subsequent to the base year (FY 2019-20). Incentives are applicable under the scheme from 01.08.2020.

Over the tenure of PLI Scheme, the 16 approved companies are expected to lead to total production of more than INR 10,50,000 crore (INR 10.5 lakh crore). Out of the total production of INR 10,50,000 crore in the next 5 years, around 60% is expected to be contributed by exports of the order of INR 6,50,000 crore (INR 6.5 lakh crore). The  companies  approved  under  the  scheme  is  expected  to  bring  an  additional investment in electronics manufacturing to the tune of INR 11,000 crore.

After  the  success  of  the  First  Round  of  PLI  Scheme  in  attracting  investments  in mobile phone and electronic components 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% have been  extended  on  incremental  sales  (over  base  year  i.e.,  FY  2019-20)  of goods  manufactured  in  India  and  covered  under  the  target  segment,  to  eligible companies, for a period of four (4) years. 16 companies have been approved under the second round of PLI Scheme for Large Scale Electronics Manufacturing.

Over the tenure of Second Round, the 16 approved electronic component manufacturers are expected to generate a total production of upto INR 12,432 crore. The Second Round of the Scheme is expected to bring an additional investment in electronics manufacturing to the tune of INR 573 crore.

- ii. Production Linked Incentive Scheme (PLI) for IT Hardware was notified on 3rd March,  2021.  The  PLI  Scheme  extends  an  incentive  of  4%  to  2%  /  1%  on  net incremental sales (over base  year i.e., FY 2019-20) of goods under target segments that are manufactured in India to eligible companies, for a period of four years (FY 2021-22 to FY 2024-25). The target IT hardware segments under the Scheme include Laptops, Tablets, All-in-One Personal Computers (PCs) and Servers.  Incentives are applicable  under  the  Scheme  from  01.04.2021.  14  companies  have  been  approved under the PLI Scheme for IT Hardware.

Over  the  tenure  of  Scheme,  the  14  approved  companies  under  the  Scheme  are expected  to  lead  to  total  production  of  about  INR  1,60,000  crore.  Out  of  the  total production of INR 1,60,000 crore in the next 4 years, more than 37% is expected to be contributed by exports of the order of INR 60,000 crore. The scheme is expected to bring an additional investment in electronics manufacturing to the tune of INR 2,500 crore.

- iii. Scheme  for Promotion of Manufacturing  of Electronic  Components  and Semiconductors (SPECS) was notified on 1st April 01, 2020. The SPECS Scheme 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. The Scheme  is  open  to  receive  applications  till  31.03.2023.  Over  the  tenure  of  SPECS

Scheme, the expected new investment in Electronic Components and sub-assemblies is INR 20,000 crore. The total employment potential of the scheme is approximately 6,00,000 (1,50,000 direct employment and 4,50,000 indirect employment).

- iv. Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme was notified on 1st  April,  2020.  The EMC 2.0 Scheme 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 their production facility in the country.  The  Scheme  provides  financial  assistance  for  setting  up  of  both  EMC projects as  well as Common Facility Centres (CFCs) through Project Implementing Agency  such  as  State  Government  or  their  agency,  Central  Public  Sector  Units (CPSUs)  /  State  Public  Sector  Units  (SPSUs),  Industrial  Corridor  Development Corporations  (ICDCs)  or  Joint  Venture  of  such  agencies  with  Anchor  unit(s)  or industrial park developers. Under EMC 2.0 scheme, 3 EMC applications covering an area  of  1,337  acres  have  been  approved  with  project  cost  of  INR  1902.69  crore including financial assistance of INR 889.02 crore from Government of India. These EMCs  are  poised  to  attract  an  investment  of  about  INR  20,910  crore  and  having potential to generate 51,520 employment opportunities after getting operational. An amount of INR 205.24 crore has been released for scheme execution.
- v. Modified Special Incentive Package Scheme (MSIPS)In  order  to  promote  large scale manufacturing in the country, MSIPS was announced by the Government in July 2012. It has been amended twice - in August, 2015 and in January, 2017, and mainly provide  Capex  subsidy  of  20-25%.  It  has  been  closed  on  31 st December,  2018  to receive new applications. In this scheme, 320 applications with proposed investment of  INR  89,194  crore  are  under  consideration.  Out  of  these  320  applications,  315 applications with proposed investment of INR 86,904 crore and committed incentives of INR 9,566 crore have been approved. Incentives amounting to INR 1917.09 crore have been disbursed. Out of 315 approved units, 271 units have reported invested of INR  33,506  crore  and  242  units  have  started  production.  Direct  and  indirect employment generated so far is 3,45,571. Total sales (domestic and exports) from the units under production are INR 6,63,274 crore which include export of INR 1,06,740 crore.
- vi. Program  for  Development  of  Semiconductors  and  Display  Manufacturing Ecosystem -  To widen and deepen electronics manufacturing, the Union Cabinet on 15.12.2021, approved a comprehensive program with an outlay of INR 76,000 crore (> USD 10 billion) for the development of Semiconductors and Display manufacturing  ecosystem.  With  the  approval  of  Cabinet,  this  Programme  has  been recently modified on 21.09.2022. The modified programme offers Fiscal Support of 50% of Project Cost uniformly for semiconductor fabs across the technology nodes as well as for compound semiconductors, packaging and other semiconductor facilities. Following Fiscal incentives are now available to eligible applicants:
4. o Modified  Scheme  for  setting  up  of  Semiconductor  Fabs: It  provides  fiscal support  for  setting  up  semiconductor  wafer  fabrication  facilities  in  the  country. Fiscal  support  of  50%  of  the  Project  Cost  is  available  for  setting  up  of  siliconbased semiconductor fabs across all technology nodes.
5. o Modified  Scheme  for  setting  up  of  Display  Fabs in  India  for  attracting  large investments for manufacturing TFT LCD or AMOLED based display panels in the country  to  strengthen  the  electronics  manufacturing  ecosystem.  Scheme  extends fiscal  support of up to 50% of Project Cost on pari-passu basis for setting up of Display Fabs in India
6. o Modified  Scheme  for  setting  up  of  Compound  Semiconductors  /  Silicon Photonics  /  Sensors  Fab/  Discrete  Semiconductor  Fabs  and  Semiconductor ATMP /  OSAT  facilities  in  India: It  provides  a  fiscal  support  of  50%  of  the Capital Expenditure  to  the  eligible applicants  for  setting  up  of  Compound Semiconductors  /  Silicon  Photonics  (SiPh)  /  Sensors  (including  MEMS)  Fab/ Discrete Semiconductor Fabs and Semiconductor ATMP / OSAT facilities in India.
7. o Semicon India Future Design: Design Linked Incentive (DLI) Scheme: It offers financial incentives, design infrastructure support across various stages of development  and  deployment  of  semiconductor  design  for  ICs,  Chipsets,  SoCs, Systems & IP Cores and semiconductor linked design. The scheme provides both 'Product Design Linked Incentive' and 'Deployment Linked Incentive'.

In addition to the incentives offered under the Schemes highlighted above, Government has adopted various measures/steps to promote electronics manufacturing inter alia exports and ease of doing business in the country. The steps taken by the Government for the expansion of electronic manufacturing and exports in the country are at Annexure I .

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Steps  taken  by  the  Government  for  the  expansion  of  electronics  manufacturing  inter  alia exports in the country:

1. Special  Economic  Zones  (SEZs) are  set  up  to  enable  hassle-free  manufacturing  and trading for export purposes and Electronic Hardware Technology Park (EHTP) units are the major contributors to exports.
2. Remission of Duties and Taxes on Exported Products (RoDTEP) : The scheme for reimbursement  of  currently  un-refunded  Central,  State  and  Local  Taxes  and  Duties incurred in the process of manufacture and distribution of exported products has been put into  effect  from  01.01.2021  through  a  Central  Board  of  Indirect  Taxes  and  Customs (CBIC) advisory. Major Components of such taxes is electricity duty and VAT on fuels used in transportation / distribution. The Scheme is being implemented by CBIC in an online environment.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. Relaxing  the  ageing  restriction: The  Department  of  Revenue  vide  Notification No.60/2018-Customs dated 11.09.2018 has amended  the Notification No.158/95Customs 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.
10. 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  vide  Notification  dated 07.09.2020  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. 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

11. Compulsory  Registration  Order  (CRO) : MeitY has notified 'Electronics notified under the CRO and the order is applicable on all product categories.

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