Lok Sabha Question No. 425 (UNSTARRED), answered on 2021-02-03
Subject: Large Scale Electronic Manufacturing
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: C.N. Annadurai, Dhanush M Kumar, Gautham Sigamani Pon, Gajanan Chandrakant Kirtikar

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED   QUESTION NO. 425

TO BE ANSWERED ON 03.02.2021

## LARGE SCALE ELECTRONIC MANUFACTURING

## 425.    SHRI C.N. ANNADURAI: SHRI DHANUSH M. KUMAR: SHRI GAUTHAM SIGAMANI PON: SHRI GAJANAN KIRTIKAR:

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

- (a) whether the Government has achieved the aims and objective of launching Production Linked Incentive (PLI) Scheme for Large Scale electronics manufacturing and if so, the details thereof;
- (b) the number of companies that have applied for availing benefit under the PLI for large scale  electronics  manufacturing  in  the  State  of  Tamil  Nadu  from  the  start  of  the scheme till now and the number of companies cleared under different categories;
- (c) whether the Government is planning to seek a second round of application under PLI specially directed to attract electronics manufacturers;
- (d) if  so,  the  quantum  of  sops  to  be  given  and  the  number  of  companies  likely  to  get approval; and
- (e) the steps taken/being taken by the Government to give incentives to electronics sector to boost the market during pre-COVID-19 and post-COVID-19 period and the results yielded so far by the said incentives?

## ANSWER

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

(a) and (b): To attract and incentivize large investments in the electronics value chain and promote exports, Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing has been notified under the aegis of National Policy on Electronics 2019 on  April  1,  2020.  The  Scheme  shall  extend  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.

The scheme was open to receive applications till 31.07.2020.

The PLI Scheme has been a huge success in terms of the interest received from across the globe. 16 applications have been approved under different categories, as under: Mobile  Phones  (Category  -  Invoice  Value  INR  15,000  and  above):  5;  Mobile  Phones (Category: Domestic Companies): 5; Specified Electronic Components: 6

Out of 16 approved applications, 3 companies have their manufacturing location(s) in the State of Tamil Nadu.

(c) and (d): As of now, no proposal to seek a second round of application under the PLI Scheme has been approved.

(e):  As  a  result  of  steps  taken  by  the  Government  to  promote  domestic  electronics manufacturing,  annexed  herewith,  the  domestic  production  of  electronic  goods  has increased  substantially  from  INR  1,90,366  crore  (USD  29  billion)  in  2014-15  to  INR 5,33,550  crore  (USD  75.7  billion)  in  2019-20,  at  a  Compound  Annual  Growth  Rate (CAGR) of 23%.

During COVID-19 period, MeitY introduced three new schemes for promoting Make in India for the electronics manufacturing sector, viz., Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing, Scheme for Promotion of Manufacturing  of  Electronic  Components  and  Semiconductors  (SPECS)   and  Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme  on 1 st April, 2020.

The three schemes together will enable large scale electronics manufacturing, domestic supply chain of components and state-of-the-art infrastructure and common facilities for large  anchor  units  and  their  supply  chain  partners.  The  overall  impact  of  these  new schemes will be an increase in domestic value addition, creation of National / Domestic Champion Companies and incremental manufacturing of  about  INR  15  lakh  crore  and exports of about INR 10 lakh crore, along with employment to more than 10 lakh people in electronics manufacturing sector over the next 5 years.

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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-01042020-218990 dated April 01, 2020 shall extend 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.
- 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 shall provide 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  shall provide  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  shall  provide  financial assistance for setting up of both EMC projects and Common Facility Centres (CFCs) across the country.
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) :  The Scheme was notified on 27 th July, 2012 to provide financial incentives to offset disability and attract investments in the electronics manufacturing sector. It was 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 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  EMC  Scheme,  nineteen  (19)  Greenfield  Electronics  Manufacturing Clusters  (EMCs)  and  three  (3)  Common  Facility  Centres  (CFCs)  have  been  approved  in fifteen  (15)  states  across  the  country.  These  EMCs  are  being  developed  over  an  area  of 3,464 acres with a project outlay of INR 3,743 crore including Government grant-in-aid of INR 1,527 crore.

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.  EDF  is  expected  to invest in 9 Daughter Funds. The total targeted corpus of these 9 Daughter Funds is Rs. 2,626 crore and the amount committed by EDF to these 9 Daughter Funds is Rs. 409 crore.
6. Phased Manufacturing Programme (PMP) has been notified to promote domestic value  addition  in  mobile  handsets  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 handsets  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  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 :  The  Government  of India  has  issued  Public  Procurement  (Preference  to  Make  in  India)  Order  2017  [PPP-MII Order 2017] to encourage  'Make in  India'  and  promote  manufacturing  and  production  of goods  and  services  in  India  with  a  view  to  enhancing  income  and  employment.   In furtherance  of  the  aforesaid  Order,  Ministry  of  Electronics  and  Information  Technology (MeitY) vide Notification No. W-43/4/2019-IPHW-MeitY dated 07.09.2020 has notified the 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.
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. The details are available at the website of MeitY (http://meity.gov.in/esdm/standards).
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-the-art,  high-volume  and  costeffective electronic components based on organic devices to address requirements through joint technology developments, to realize indigenous technologies for manufacturing.