Lok Sabha Question No. 2705 (UNSTARRED), answered on 2021-08-04
Subject: Domestic Electronic Industry
Ministry: COMMERCE AND INDUSTRY
Asked by: Ramesh Bidhuri

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE

## LOK SABHA

## UNSTARRED QUESTION NO. 2705. TO BE ANSWERED ON WEDNESDAY, THE 4 TH  AUGUST, 2021.

## DOMESTIC ELECTRONIC INDUSTRY

## 2705.  SHRI RAMESH BIDHURI:

## Will the Minister of COMMERCE AND INDUSTRY be pleased to state: वाणिज्य  एवं उद्योग मंत्री

- (a) whether the Government has taken any steps for the promotion of domestic electronic industry of the country under Make In India scheme keeping in view the challenges from the global electronic industry and if so, the details thereof;
- (b) whether the Government is planning for production linked incentive schemes for manufacturing ACs and LEDs in order to boost the domestic manufacturing; and
- (c) if so, the details thereof?

## ANSWER

## वाणिज्य  एवं उद्योग मंत्रालय में राज्य मंत्री (श्री सोम प्रकाश) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI SOM PARKASH)

- (a): The  steps  taken  by  the  Government  for  the  promotion  of  domestic electronic industry of the country under Make in India scheme keeping in view the challenges from the global electronic industry are enclosed at Annexure.
- (b) & (c): The  Union  Cabinet  has  given  approval  to  the  Production-Linked Incentive  (PLI)  Scheme  for  White  Goods  (Air  Conditioners  and  LED lights)  to  be  implemented  over  FY  2021-22  to  FY  2028-29  with  an outlay of Rs. 6238 Crore on 7th April 2021.

The  Scheme  has  been  notified  by  DPIIT  on  16.04.2021  and  the Scheme  Guidelines  has  been  published  on  4th  June,  2021.  Online application window is open from 15/06/2021 to 15/09/2021.

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## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PART  (a)  OF  THE  LOK  SABHA UNSTARRED QUESTION NO. 2705 FOR ANSWER ON 04.08.2021.

## 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:
2. (i) Production Linked Incentive Scheme (PLI) for Large Scale Electronics  Manufacturing notified  vide  Gazette  Notification  No.CGDL-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.  After  the  success  of  the  First  Round  of Production Linked Incentive Scheme in attracting investments in mobile phone and electronic component 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. 2019-20) of goods manufactured in India and covered under the target segment, to eligible companies, for a period of four (4) years.
3. (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.
4. (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, 2021 provides 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-inOne 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, 306 units with an investment of INR 83,895 crore and committed incentives of INR 9,049 crore have been approved. Incentives amounting to INR 1,203.77 crore have been disbursed. Out of 306 units approved, 237 units have invested INR  26,799  crore  and  207  units  have  started  production.  Direct  and  indirect employment generated so far is 2,52,783. Total sales (domestic and exports) from the units under production are INR 3,70,242  crore which include export of INR 45,808 crore.

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 3,743 crore including Government Grant-inAid 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.
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.60/2018-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  reimported 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 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 44 product categories.

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