Lok Sabha Question No. 1555 (UNSTARRED), answered on 2021-07-28
Subject: Promotion of Electronics Manufacturing Sector
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Nama Nageswara Rao

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED  QUESTION NO.1555

TO BE ANSWERED ON 28.07.2021

## PROMOTION OF ELECTRONICS MANUFACTURING SECTOR

## 1555     SHRI NAMA  NAGESWARA  RAO:

Will the Minister of Electronics and Information Technology be pleased to state:

- (a) whether the Government proposes to promote electronics manufacturing sector in order to make the country self sufficient in electronic manufacturing and generate employment and if so, the details thereof;
- (b) the action taken by the Government in this regard alongwith the employment generated in the sector during each of the last three years;
- (c) whether  the  Government  has  received  any  proposals  from  State  Governments  with regard  to  Electronic  Manufacturing  Cluster  (EMC)  and  Electronic  System  Design Manufacturing (ESDM) incubation centre and if so, details thereof; and
- (d) the steps taken by the Government to approve the aforesaid proposals?

## ANSWER

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

(a)  and  (b):  Government  has  taken  strategic  steps  and  initiatives  to  expand  the  electronics manufacturing sector in  the  country  and  make  India  global  electronics  manufacturing  hub, resulting in significant employment generation. The steps taken by Government to promote domestic electronics manufacturing are at Annexure-1 .  As per the Confederation of Indian Industry (CII), employment in Electronics hardware manufacturing industry in the country is estimated to be about 30 lakh persons.

(c) and (d):   Electronics Manufacturing Clusters (EMC) scheme was introduced to provide support for creation of world-class infrastructure for attracting investments in the Electronics Systems Design and Manufacturing (ESDM) Sector. It is aimed at making India a global hub for electronics manufacturing and offset constraints faced by industries for reliable infrastructure. The Electronics Manufacturing Clusters (EMC) Scheme was open for receipt of applications  till  October  2017.  Under  the  Scheme,  15  projects  for  setting  up  of  Greenfield Electronics Manufacturing Clusters received from State Governments or their agencies have been approved. The details of these EMCs are placed at Annexure-2 .

Further, under the Modified Electronics Manufacturing Clusters (EMC2.0) Scheme which is open for receipt of applications upto March, 2023, Ministry of Electronics and Information Technology  (MeitY)  has  received  two  proposals  from  industrial  agency  of  the  State Government  for  setting  up  of  Electronics  Manufacturing  Cluster  projects  in  the  States  of Andhra Pradesh and Haryana. Details of these EMCs are placed at Annexure-3 .

No proposal has been received with regard to setting up of incubation centre in any State. However, the following incubation centres have been setup by MeitY in collaboration with the State Governments to promote innovation-driven Electronics System Design and Manufacturing (ESDM), R&D and create Indian IPs:

- Electronics  Incubator  by  IIITM-  Kerala  and  KSUM  at  Cochin,  Kerala: The project for setting up of Electronics Incubator at Cochin,  Kerala by Indian Institute of Information Technology and Management Kerala (IIITM-K) and M/s. Kerala Startup Mission  (KSUM)  is  aimed  at  creation  of  new  enterprises  focused  on  Consumer Electronics through a holistic incubation ecosystem with support of Kerala Government.
- Setting  up  of  Incubation  Centre  in  the  area  of  ESDM  with  focus  on  Medical Electronics at IIT Patna: The primary objective of the incubation facility is to promote innovation  and  entrepreneurship  with  the  aim  to  identify,  nurture  and  translate technological ideas and innovation in the broad area of ESDM sector with a focus in Medical Electronics.
- ESDM Incubation Centre at Bhubaneswar by STPI: MeitY has  Approved ESDM Incubation  Centre  with  the  objective  of  creating  a  holistic  eco-system  to  promote ESDM innovation, R&D and create Indian intellectual property in the Eastern Region of the country. The centre is being operated through STPI, Odisha in collaboration with Government of Odisha,  IIIT Bhubaneswar and IESA.

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## 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-01042020218990  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 subassemblies 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 an incentive 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 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 in Electronics System Design and Manufacturing (ESDM) Sector. 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-inAid of INR 1,527 crore have been approved. About 285  companies  have  booked  1,135  acres  of  land  space  with  proposed  investment  of around Rs. 39,000 crore for setting up of their manufacturing  facility in such EMCs. Out of these, 38 companies are under commercial production and another 85 companies have started construction and are various stage of implementation.
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.158/95Customs 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.
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 till date.
13. 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.
14. 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.
15. National  Centre  of  Excellence  for  Next  Generation  AMOLED  Displays, OLED Lighting and OPV Products has been set up at IIT-Madras with a

mandate to collaborate with stakeholders to develop next-generation, state- of-theart, high-volume and cost effective electronic components based on organic devices to address requirements through joint technology developments, to realize indigenous technologies for manufacturing.

16. Centre on Excellence  (CoE) on Medical Electronics and Bio-Physics has been approved to be set up at Andhra Pradesh MedTech Zone (AMTZ),  Visakhapatnam with a mandate of carrying out various R&D activities, strengthening innovations, IP  creation,  prototype  modelling  for  Medical  device  manufacturers,  including Electro-Biomaterial technology product  manufacturers, etc.
17. Establishment  of  Gallium  Nitride  (GaN)  Ecosystem  Enabling  Centre  and Incubator: The project for 'Establishment of Gallium Nitride (GaN) Ecosystem Enabling Centre and Incubator for High Power and High Frequency Electronics' has been approved. The project is being implemented by Society for Innovation and Development (SID) under the auspices of Indian Institute of Science (IISc) at Centre for  Nano Science and Engineering (CeNSE), Bengaluru.

## Annexure-2

(Amount: INR crore)

|   # | States         | Location ofEMC                                                                  | Implementing agency                                                |   EMC Area (Acres) |   Project Cost |   Grant- in-aid |
|-----|----------------|---------------------------------------------------------------------------------|--------------------------------------------------------------------|--------------------|----------------|-----------------|
|   1 | Andhra Pradesh | EMC-I @ Renigunta and Yerpadu Mandal, Chittor District, Near Airport, Tirupathi | Andhra Pradesh Industrial Infrastructure Corporation Ltd. (APIIC)  |             113.27 |         104.41 |           46.53 |
|   2 | Andhra Pradesh | EMC-II @ Vikruthamala Village, Yerpadu Mandal, Chittor District, Tirupathi      | Andhra Pradesh Industrial Infrastructure Corporation Ltd. (APIIC)  |             501.4  |         339.8  |          111.42 |
|   3 | Assam          | Bongora, Kamrup District, Assam                                                 | Assam Electronics Development Corporation Limited (AMTRON)         |             100    |         119.85 |           50    |
|   4 | Chhattisgarh   | Village-Tuta, Sector-22, Naya Raipur,Tehsil- Abhanpur, Raipur District          | Chhattisgarh State Industrial Development Corporation ltd. (CSIDC) |             116.48 |         103.88 |           43.08 |

|   5 | Goa            | Village-Tuem , Taluka- Pernem Goa                        | Department of IT, Government of Goa                                         |   147.55 |   161.32 |   73.77 |
|-----|----------------|----------------------------------------------------------|-----------------------------------------------------------------------------|----------|----------|---------|
|   6 | Jharkhand      | Adityapur, Saraikela- Kharsawan District                 | Jharkhand Industrial Area Development Authority (JIADA)                     |     2.49 |    97.88 |   41.48 |
|   7 | Kerala         | Kakkanad Village,Kanayannur Taluk, Ernakulam District    | Kerala Industrial Infrastructure Development Corporation (KINFRA)           |    66.87 |   140.01 |   50    |
|   8 | Madhya Pradesh | Badwai-Bhopal                                            | Madhya Pradesh State Electronics Development Corporation                    |    50    |    47.19 |   20.86 |
|   9 | Madhya Pradesh | Purva-Jabalpur                                           | Madhya Pradesh State Electronics Development Corporation                    |    40    |    38.57 |   17.76 |
|  10 | Odisha         | Infovalley, Bhubaneswar Industrial Area, Khurda District | Ltd.(MPSEDC) Odisha Industrial development Corporation (IDCO)               |   203.37 |   200.76 |   93.09 |
|  11 | Rajasthan      | Karoli Industrial Area, Bhiwadi, District-Alwar          | Rajasthan State Industrial Development& Investment Corporation Ltd. (RIICO) |   121.51 |    78.98 |   31.68 |
|  12 | Telangana      | E-City, Hyderabad                                        | Telangana State Industrial                                                  |   603.52 |   667.6  |  252.42 |
|  13 | Telangana      | Maheshwaram, Rangareddy District                         | Infrastructure Corporation (TSIIC)                                          |   310.7  |   436.97 |  138.6  |
|  14 | West Bengal    | Falta, South 24 Parganas District                        | West Bengal Electronics Industry                                            |    58.04 |    58.86 |   25.64 |
|  15 | West Bengal    | Naihati, North 24 Parganas District                      | Development Corporation Limited (WEBEL)                                     |    70    |    58.31 |   25.7  |

## Annexure-3

|   # | States         | Location ofEMC                    | Implementing agency                                                               |   EMC Area (Acres) | Status                   |
|-----|----------------|-----------------------------------|-----------------------------------------------------------------------------------|--------------------|--------------------------|
|   1 | Andhra Pradesh | Kopparthy, Kadapa Y.S.R District, | Andhra Pradesh Industrial Infrastructure Corporation Ltd. (APIIC)                 |                540 | Approved                 |
|   2 | Haryana        | IMTSohna                          | Haryana State Industrial and Infrastructure Development Corporation Ltd. (HSIIDC) |                500 | Recommended for approval |

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