Lok Sabha Question No. 2871 (UNSTARRED), answered on 2021-12-15
Subject: Boost in electronic manufacturing
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Vellalath Kochukrishnan Nair. Sreekandan

## GOVERNMENT OF INDIA

## MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED  QUESTION NO.

## 2871

TO BE ANSWERED ON 15.12.2021

## BOOST IN ELECTRONIC MANUFACTURING

## 2871.   SHRI V.K. SREEKANDAN:

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

- (a)  whether it is a fact that the Government is considering to boost electronics manufacturing in the country and if so, the details thereof;
- (b)    whether  the  Government is preparing a 1,000 day plan to broaden and deepen electronics manufacturing, exports and share in global vale chains;
- (c)    whether  the  role  of  global  vale  chain  is  a  key  factor  in  the  expansion  of  electronic manufacturing in the country; and
- (d)  if so, the steps taken in this regard?

## ANSWER

## MINISTER FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI ASHWINI VAISHNAW)

(a): Yes, Sir.  Government of India's goal is to make India a significant design and manufacturing hub in the Global Value Chain for Electronics as part of its AtmaNirbhar Bharat Economic policies. As part of this, we are broadening and deepening our Electronics Eco-system. In the post COVID19 global business and trade environment, there are many changes that represent challenges and opportunities for India. Global companies are looking to diversify their manufacturing locations to mitigate the supply chain risks.

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 in the country and attract, incentivize large investments in the electronics value chain and promote exports, following four Schemes have been notified:

- (i) Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing was notified on 1 st 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.  16  companies  have  been approved under the first round of PLI Scheme for Large Scale Electronics Manufacturing.

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. 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%  shall  be  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.

In accordance with the announcement made by Hon'ble Union Finance & Corporate Affairs Minister  on  28.06.2021  to  provide  relief  to  companies  approved  under  the  PLI  Scheme affected  by  the  COVID-19  pandemic,  the  tenure  of  the  PLI  Scheme  for  Large  Scale Electronics Manufacturing has been extended by one year i.e. from 2024-25 to 2025-26. The notification in this regard was issued on 23.09.2021.

- (ii) Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) was notified on 1 st 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. Under the Scheme, 16 applications have been recommended for approval with total project outlay of INR 6,892 crore and committed incentives of INR 1,218 crore. SPECS Scheme is open to receive applications till 31.03.2023.

Over the tenure of SPECS Scheme, the expected new investments 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).

- (iii) Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme was  notified  on  1 st 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.

The total approved outlay of the Scheme is INR 3,762 crore for a period of 8 years with initial 3 years for receipt of applications. As of now, 2 applications for setting up of EMC have been approved with proposed investment of INR 18,910 crore. The EMC 2.0 Scheme is targeted to attract new investment in the electronics sector and generation of about 10 lakh employment opportunities.

- (iv) Production Linked Incentive Scheme (PLI) for IT Hardware was notified on 3 rd 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. The 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.

(b):  Yes,  Sir.    Government  of  India  is  working  on  a  1,000  day  plan  to  broaden  and  deepen electronics manufacturing, exports and share in global value chains. Ministry of Electronics and Information  Technology  (MeitY)  has  worked  with  electronics  manufacturing  associations  to prepare document titled 'Increasing India's Electronics Exports and Share in GVCs - towards an Atmanirbhar Bharat'.  This  document  focuses  on  the  opportunities  to  increase  India's  share  in Global Value Chain and build large scale electronics manufacturing capabilities.

(c) and (d): Yes, Sir.  A number of activities have been undertaken for engaging and attracting the global value chains in order to increase the domestic value addition. Series of supply chain meets has been organized in  association with major electronics manufacturers  in order to bring their vendors.  In  addition,  a  series  of  webinars,  conferences,  meetings  were  also  organised  in coordination with Indian Embassies overseas, foreign Embassies in India, Industry Associations,

Local Industry, Consulting companies, Banks etc. for creating awareness of various schemes of MeitY and other Ease of Doing Business (EoDB) initiatives of the Government for attract the global value chain of electronics manufacturers to India. The steps taken by the Government for the expansion of electronic manufacturing in the country are at Annexure .

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## Annexure

## Steps taken by the Government for the expansion of electronic manufacturing in the country

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.
2. 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:
3. (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.
4. (ii) 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 (iv) Servers
5. (iii) Scheme  for  Promotion  of  Manufacturing  of  Electronic  Components  and  Semiconductors (SPECS) notified vide Gazette Notification No.CG-DL-E-01042020-218992 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.
6. (iv) 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.
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
9. covering entire electronics manufacturing value chain. The Scheme was open to receive applications till 31.12.2018 and is in the implementation mode. Under the Scheme, 308 applications with proposed investment of Rs 83,598 crore have been approved. Further, incentives amounting to Rs 1372.33 crore have been disbursed under this Scheme.
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 3,762 crore including Government Grant-in-Aid of INR 1,538 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.60/2018Customs  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 local 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 63 product categories.
13. 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 will be implemented by Society  for  Innovation  and  Development  (SID),  being  converted  to  a  Section  8  company  titled 'Foundation for Science, Innovation and Development' under the auspices of  Indian  Institute  of Science (IISc) at Centre for Nano Science and Engineering (CeNSE), Bengaluru.

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