Lok Sabha Question No. 597 (UNSTARRED), answered on 2022-07-20
Subject: Manufacturing and Export of Electronic Goods
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Malook Nagar

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA

## UNSTARRED QUESTION NO. 597

TO BE ANSWERED ON 20.07.2022

## MANUFACTURING  AND EXPORT OF ELECTRONIC GOODS

## 597    SHRI MALOOK  NAGAR:

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

- (a) the details of the manufacturing and export of electronic goods in the country during the last five years ;
- (b) the details of the initiatives taken by the Government to promote the manufacturing of electronic goods in the country;
- (c) the details with regard to the number of electronic companies set up in the country under the 'Make in India' programme?

## ANSWER

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

- (a): Government  has  taken  strategic steps and initiatives to expand  the electronic manufacturing in the country and make India a global electronics manufacturing hub. Over the last five years, the production and export of electronic goods is as under:

|             | 2016-17   | 2017-18   | 2018-19   | 2019-20   | 2020-21   |
|-------------|-----------|-----------|-----------|-----------|-----------|
| Production* | 3,17,331  | 3,88,306  | 4,58,006  | 5,33,550  | 5,54,461  |
|             | 2017-18   | 2018-19   | 2019-20   | 2020-21   | 2021-22   |
| Exports**   | 41,220    | 61,908    | 82,929    | 81,822    | 116,894   |

## (Values in INR crore)

- *Source: Annual Report of Ministry of Electronics and Information Technology

- **Source: Directorate General of Commercial Intelligence and Statistics (DGCIS)

There  has  been  an  increase  in  both  manufacturing  and  export  of  electronic  goods  in  the country in last five  years. The export of electronic goods has substantially increased in the period  2017-18  to  2021-22  with  a  compound  annual  growth  rate  of  29%  whereas  the production has grown with a compound annual growth rate of 17.9 %.

- (b): Government of India's goal is to make India a significant design and manufacturing hub as part of its AtmaNirbhar Bharat economic policies. In this regard, we are broadening and deepening our electronic manufacturing ecosystem. The steps taken by Government for the promotion of electronics manufacturing in the country are at Annexure .
- (c): To create an eco-system for development of ESDM Sector in the entire country, a total of 391  companies  are  direct  beneficiaries  of  various  schemes/programmes  under  'Make  in India' programme.

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## Steps taken by the Government to promote 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 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.

Second  Round  of  the  PLI  Scheme  for  Large  Scale  Electronics  Manufacturing  was  launched  on 11.03.2021 for incentivizing Electronic Components.  Under the Second Round, incentives of 5% to 3% shall be extended on incremental sales 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-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.
- (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, 2021provides 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.
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, 314 applicants with an investment of INR 86,912 crore and committed incentives of INR 9,544 crore have been approved. Incentives amounting to INR 1781.02 crore have been disbursed. Out of 314 units approved, 271 units have invested INR 31,416 crore and 233 units have started production.

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 3,464acres with total project cost of INR 3,743 crore including Government Grant-in-Aid of INR 1,527 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. Till date, EDF has invested INR 236.48 crore in 8 Daughter funds with direct employment generation of 18,500.
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  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.
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 all product categories.

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