Lok Sabha Question No. 1270 (UNSTARRED), answered on 2022-12-14
Subject: Manufacturing of Electronics Items
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Ranjanben Dhananjay Bhatt, Malook Nagar

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA

## UNSTARRED QUESTION NO. 1270

TO BE ANSWERED ON 14.12.2022

## MANUFACTURING OF ELECTRONICS ITEMS

## 1270.   SHRIMATI RANJANBEN DHANANJAY BHATT: SHRI MALOOK NAGAR:

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

- (a) the details of the electronic goods manufactured and exported from India during the last five years;
- (b) whether the government is contemplating to increase export of electronics goods and if so, the details thereof alongwith action taken thereon;
- (c) the  details  of  initiatives  taken  by  the  government  to  promote  the  manufacturing  of electronic goods in the country;
- (d) the number of electronic companies launched under the 'Make in India' program in the country?

## ANSWER

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

(a):  Government of India's goal is to make India a significant Electronics System Design and manufacturing hub as part of its  AtmaNirbhar  Bharat  economic  policies.  As  a  result,  both production  and  exports  of  electronic  items  have  grown  substantially.  The  details  of  the electronic goods manufactured and exported are placed hereunder:

(Values in INR Crore)

|             | 2017-18   | 2018-19   | 2019-20   | 2020-21   | 2021-22   |
|-------------|-----------|-----------|-----------|-----------|-----------|
| Production* | 3,88,306  | 4,58,006  | 5,33,550  | 5,44,461  | 6,40,810  |
| Exports     | 41,220    | 61,908    | 82,929    | 81,822    | 1,09,797  |

*Source: Industry Associations

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

(b)  and  (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 201920)  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:

- 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.
- 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
- 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.
- o Design  Linked  Incentive  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 .

(d):  To create an eco-system for development of ESDM Sector in the entire country, a total of  333  companies  are  direct  beneficiaries  of  various  schemes/programmes  under  'Make  in India' programme.

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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 re-imbursement 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.
11. 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 all product categories.

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