Lok Sabha Question No. 2516 (UNSTARRED), answered on 2023-03-15
Subject: Design and Manufacturing of Electronic System
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Jamyang Tsering Namgyal

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA

## UNSTARRED QUESTION NO. 2516

TO BE ANSWERED ON: 15.03.2023

## DESIGN AND MANUFACTURING OF ELECTRONICS SYSTEM

## 2516.      SHRI JAMYANG TSERING NAMGYAL:

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

- (a) whether the schemes and projects under make in India fulfils all the criteria to achieve Global Hub for electronics system design and manufacturing and if so, the details thereof;
- (b) whether it  is  a  fact  that  digital  Mission  of  India  reduces  the  unemployment  rate  of India and secures the job sector for the youth and if so, the details thereof;
- (c) the  details  of  the  raw  materials  which  India  imports  and  exports  for  electronic purposes;
- (d) whether the Government has found any suitable location in Himalayan region of India to carry forward electronics manufacturing and institutions; and
- (e) if so, the details thereof?

## ANSWER

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

(a):  India is emerging as trusted player in global value chain of electronics and has a target of USD 300 Bn for electronics manufacturing by 2025-26. In this connection, Government of India has taken various strategic steps and initiatives to broaden and deepen the Electronics Manufacturing  and  Information  Technology  sector  in  the  country.  In  order  to  boost electronics manufacturing including semiconductors, and position India as a global hub for Electronics System Design and Manufacturing (ESDM) and compete globally, the steps taken by the Government for electronics manufacturing in the country are at Annexure 1 .

(b):    Digital  India  mission  is  a  programme  to  transform  India  into  a  digitally  empowered society  and  knowledge  economy.  The  umbrella  scheme  has  been  pivotal  in  generating employment  across  all  domains.  Electronics  Manufacturing  is  an  important  pillar  under Digital  India  mission.  As  part  of  this  mission,  Ministry  of  Electronics  and  IT  (MeitY)  has launched  several notable  schemes  which  are  catalysing  the growth  of  the country's electronics  ecosystem.  In  this  regard,  as  on  December,  2022,  under Production  Linked Incentive  Scheme  for  Large  Scale  Electronics  Manufacturing 52,509  direct  jobs  have  been generated. Similarly, under Production Linked Incentive Scheme for IT Hardware , 504 direct jobs have been generated. In addition, MeitY has approved following two schemes for Skill Development in ESDM Sector. viz., ' Scheme for Financial Assistance to select States/UTs for Skill  Development  in  Electronics  System  Design  and  Manufacturing  (ESDM)  sector ' ( Scheme-1 )  and  ' Skill  Development  in  ESDM  for  Digital  India '  ( Scheme-2 )  to  facilitate creation of an eco-system for development of ESDM Sector in the entire country. Both the above Schemes are being run concurrently; and, Schemes are being implemented by Training Partners  affiliated  to  Key  Implementing  Agencies  (ESSCI  /  NIELIT/  TSSC/HSSC).  The cumulative  target  of  both  the  Schemes  is  4,18,000.  Under  both  of  the  scheme  as  on 01.03.2023 a total of4,35,165 candidates have been enrolled  and 4,28,540 candidates have been trained out of which 3,11,862 have been certified. Further, the C2S Programme has also been initiated by MeitY with an aim to generate 85,000 number of industry-ready manpower specialized in the area of VLSI and Embedded System Design. This programme will help to leapfrog  in  Electronics  System  Design  &  Manufacturing  space  by  way  of  inculcating  the culture  of  Chip/  System-on-Chip  (SoC)/  System  Level  Design  at  B.Tech,  M.Tech  &  PhD

- level  and  will  act  as  catalyst  for  growth  of  Start-ups  involved  in  semiconductor  design thereby promoting entrepreneurship in chip design area in the country.
- (c):    The  raw  materials  required  for  electronics  manufacturing purposes, inter-alia ,  include metals (e.g., Copper, Aluminium, Molybdenum), graphite, plastics, rubber, wires, and other specialized  materials  used  for  insulation,  conduction,  etc.  with  specific  and  fine  electrical, chemical and metallurgical properties. List of key raw  materials used in electronic manufacturing is at Annexure 2 .  As per industry estimates, barring a few, all of these raw materials are imported.

(d) and (e): MeitY is implementing Modified Electronics Manufacturing Clusters (EMC 2.0) scheme  to  provide  support  for  creation  of  world  class  infrastructure  along  with  common facilities and amenities including Ready Built Factory Sheds /Plug & Play infrastructure for attracting  major  electronics  manufacturers  along  with  their  supply  chains  to  set  up  their manufacturing/production facility in the country through such clusters. While MeitY doesn't identify  any  location,  M/s  State  Infrastructure  and  Industrial  Development  Corporation  of Uttarakhand  Ltd.  (SIIDCUL)  has  submitted  application  for  establishment  of  EMC  project over  an  area  of  133.82  acres  at  Integrated  Industrial  Estate  (IIE),  Kashipur  Udham  Singh Nagar  District  in  state  of  Uttarakhand  with  a  project  cost  of  Rs.  136.35  crore  including Central Grant-in-aid of Rs. 57.78 crore.

********

Steps taken by the Government for the expansion of electronics 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.

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 was notified on April 01, 2020 to provide 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) Production  Linked  Incentive  Scheme  (PLI)  for  IT  Hardware was notified on March 03, 2021 to provide 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.
- (iii) Scheme for  Promotion  of  Manufacturing  of  Electronic  Components and Semiconductors (SPECS) was notified on April 01, 2020 to 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.
- (iv) Modified  Electronics  Manufacturing  Clusters  (EMC  2.0)  Scheme wasnotified  on  April  01,  2020  to  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 provides financial assistance for setting  up  of  both  EMC  projects  and  Common  Facility  Centres  (CFCs) across the country.
2. 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 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 silicon-based semiconductor fabs across all technology nodes.
- o Modified  Scheme  for  setting  up  of  Display  Fabs: It  provides  fiscal support  for  setting  up  TFT  LCD  /  AMOLED  based  display  fabrication facilities. It provides fiscal support of 50% of Project Cost.
- 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'.
3. 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.
4. 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.
5. 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.
6. 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.
7. Phased Manufacturing Programme (PMP) has been notified topromote 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.

********

Key raw materials used in Electronics manufacturing:

|   Sl. No. | Components                      | Raw Material                                                                                                                                  |
|-----------|---------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|         1 | Capacitors                      | BOPP Film and Metalized Film PP Film, Lead Wire with electroplating, chemical deposition, and enameling process, Cans, Etched and Formed foil |
|         2 | Resistors                       | Epoxy, Copper                                                                                                                                 |
|         3 | Semiconductors                  | Lead Frames, molding compounds, Gold wire, speciality gases and chemicals                                                                     |
|         4 | PCB's                           | CC Laminates, Prepregs, Chemicals                                                                                                             |
|         5 | Transformers & Inductors        | Fine Copper Winding Wire                                                                                                                      |
|         6 | LCD Panels & Display            | Silicon dioxide, Indium tin oxide and Glass                                                                                                   |
|         7 | LCD Lighting                    | Indium-gallium-nitrate                                                                                                                        |
|         8 | Insulators                      | Ceramic,silicon, Glass, Polymers(polyvinylchloride, polypropylene,polyethylene)                                                               |
|         9 | Base Metals/non- ferrous Metals | Copper, Aluminium, Gold, silver                                                                                                               |
|        10 | Consumables                     | Solder flux/paste, Adhesives, Electrolubes, Cleaning Agents                                                                                   |
|        11 | Modern Materials                | Nano Electronic (Nanowire, Nanocube, Graphene, Nanorod), superconductors indium and gallium)                                                  |

*******

## Annexure 2