Lok Sabha Question No. 706 (UNSTARRED), answered on 2024-02-07
Subject: Electronic Manufacturing Clusters
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Rajiv Pratap Rudy

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA

## UNSTARRED QUESTION NO. 706

TO BE ANSWERED ON 07.02.2024

## ELECTRONIC MANUFACTURING CLUSTERS

## 706:  SHRI RAJIV PRATAP RUDY:

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

- (a) the  total  number  of  Electronic  Manufacturing  Clusters  that  have  been  set  up  in  the  country, State/UT-wise including Bihar;
- (b) the total number of MNCs and Indian start-ups that have set up their units in the existing EMCs and the number of people they are employing currently;
- (c) whether  it  is  a  fact  that  the  electronic  manufacturing  sector  in  the  country  has  undergone tremendous growth in the recent years;
- (d) if so, the details of the revenue generated by the industry during the last five years along with the potential for growth in the next five years;
- (e) India's share in the total global electronics exports during the last five years along with exports. State/UT-wise; and
- (f) the  current  steps  taken  /  being  taken  by  the  Government  to  transform  India  into  a  hub  of Electronics Manufacturing by 2030?

## ANSWER

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

(a) to (f): Over the last several years, India's electronics ecosystem has seen tremendous growth and expansion, investment, and job creation. From almost insignificant in the global electronics supply chain,  India is  currently rapidly  becoming  a significant and trusted player in the electronics GVC. Most  global  and  Indian  electronics  brands  are  investing,  growing  and  creating  jobs  in  the  sector. Government of India's goal is to increase India's share in the electronics GVCs by broadening and deepening the country's electronics manufacturing sector. Government has taken several measures to boost  electronics  manufacturing  including  semiconductors  in  the  country  and  incentivize  large investments  in  the  electronic  goods  and  appliances  as  well  as  to  promote  exports.  To  boost  the electronic  manufacturing,  Ministry  of  Electronics  and  Information  Technology  (MeitY)  notified Electronics Manufacturing Clusters (EMC) Scheme in October, 2012 to provide support for creation of world class infrastructure for attracting investment in Electronics System Design and Manufacturing  (ESDM)  Sector.  Under  the  scheme,  19  Greenfield  EMCs  and  3  Common  Facility Centres (CFCs) over an area of 3,464 acres with project cost of INR 3,499 crore including central Grant-in-aid of INR 1,470 crore accorded approval in fifteen (15) states across the country. Based on further  requirement  for  strengthening  of  infrastructure  to  create  robust  electronics  manufacturing ecosystem in the country, Ministry of Electronics and Information Technology introduced Modified Electronics  Manufacturing  Clusters  (EMC  2.0)  Scheme  on  1st  April,  2020  wherein  any  State Government or State Implementing Agency (SIA) etc. orjoint venture of such agencies with Anchor Unit(s)  or  any  other  industrial  estate  /  industrial  park  developer  can  submit  its  application.  The Scheme is  open  for  receipt  of  application  for  a  period  upto  March,  2024  and  further  period  upto March, 2028 is available for disbursement of the funds to the approved projects. Under the EMC 2.0 scheme, five(5) Electronics Manufacturing Clusters and one (1) Common Facility Centres over an area of 1696.43 acres with project cost of INR 2323.81 crore including central Grant-in-aid of INR 1111.37 crore have been approved in 6 states across the country. Under the scheme, no application has been received from the state of Bihar so far. In the approved EMCs, 388 companies have taken manufacturing  space  with  projected  investment  of  INR  59,327  crore  and  having  potential  of generating employment for 2.63 lakh people. Out of these, 106 companies are already in production with  investment  of  INR  16,995  crore  and  provided  employment  to  67,270  people.  Another,  137

companies are in construction stage. More than 1 crore mandays has been generated for infrastructure development in EMC. The domestic production of electronic items has increased significantly from INR 1.80 lakh crore (29.8 Billion USD) in 2013-14 to INR 8.22 lakh crore in 2022-23 (102 Billion USD) at a Compound Annual Growth Rate (CAGR) of 18.4%, which is further expected to grow uptoINR23,95,195 crores (USD 300 Billion) by 2026.Export of electronic goods has also increased from INR 47,557 crore (USD 7.86 Bn) in FY 2013-14 to INR 1,89,934 crore in FY 2022-23 (USD 23.5 Bn), exhibiting Compound  Annual Growth Rate (CAGR)  of 16.7%(as per industry estimates).The steps taken by the Government to transform India as global electronics manufacturing hub is placed at Annexure.

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Annexure

Government  of  India's  goal  is  to  broaden  and  deepen  the  country's  electronic  manufacturing ecosystem. 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, following steps are taken by the Government:

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 five  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)  yeaINR  The  Target  Segment  under  PLI  Scheme includes (i) Laptops (ii) Tablets (iii) All-in-One PCs and (iv) Servers.

(iii) PLI Scheme 2.0 for IT Hardware: was notified on May 29, 2023 with a budgetary outlay  of  INR  17,000  crore.  The  scheme  provides  increased  flexibility  and  options  for applicants, and is tied to incremental sales and investment thresholds to further incentivize growth.  Furthermore,  semiconductor  design,  IC  manufacturing,  and  packaging  are  also included  as  incentivized  components  of  the  PLI  Scheme  2.0  for  IT  Hardware.  It  will promote large scale manufacturing in Laptops, Tablets, All-in-One PCs, Servers and Ultra Small Form Factor (USFF) devices.

(iv) 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.  The  scheme  is  open  for  receipt  of  applications  till 31.03.2024 with disbursement of incentive upto 31.03.2029.

(v) Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme was notified 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.  The Scheme is open for receipt of application for a period upto March, 2024 and further period upto March, 2028 is available for disbursement of the funds to the approved projects.

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,  the programme has further modified on 21.09.2022 in view of the aggressive incentives offered by countries already having established semiconductor ecosystem and limited number of companies owning  the  advanced  node  technologies.  The  modified  programme  aims  to  provide  financial support to companies investing in semiconductors, display manufacturing and design ecosystem. This  will  serve  to  pave  the  way  for  India's  growing  presence  in  the  global  electronics  value chains.  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:

- a) Modified Scheme for setting up of Semiconductor Fabs in India '  for  attracting  large investments  for  setting  up  semiconductor  wafer  fabrication  facilities  in  the  country  to strengthen  the  electronics  manufacturing  ecosystem  and  help  establish  a  trusted  value chain. The Scheme extends a fiscal support of 50% of the project cost on pari-passu basis for setting up of Silicon CMOS based Semiconductor Fab in India.
- b) ' Modified  Scheme  for  setting  up  of  Display  Fabs  in  India ' for attracting  large investments for manufacturing TFT LCD or AMOLED based display panels in the country to  strengthen the electronics manufacturing ecosystem. Scheme extends fiscal support of up to 50% of Project Cost on pari-passu basis for setting up of Display Fabs in India.
- c) ' Modified Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors  Fab  /  Discrete  Semiconductors  Fab  and  Semiconductor  Assembly,  Testing, Marking  and  Packaging  (ATMP)  /  OSAT  facilities  in  India' shall  extends  a  fiscal support of 50% of the Capital Expenditure on Pari-passu basis for setting up of Compound Semiconductors  /  Silicon  Photonics  (SiPh)  /  Sensors  (including  MEMS)  Fab/  Discrete Semiconductor Fab and Semiconductor ATMP / OSAT facilities in India.
- d) 'Semicon India Future Design: Design Linked Incentive (DLI) Scheme' offers financial incentives, design infrastructure support across various stages  of  development  and deployment  of  semiconductor  design  for  Integrated  Circuits  (ICs),  Chipsets,  System  on Chips (SoCs), Systems & IP Cores and semiconductor linked design. The scheme provides 'Product Design Linked Incentive' of up to 50% of the eligible expenditure subject to a ceiling of INR 15 Crore per application and 'Deployment Linked Incentive' of 6% to 4% of net sales turnover over 5 years subject to a ceiling of ₹30 Crore per application.

In  addition  to  the  above  schemes,  Government  has  also  approved  modernisation  of  SemiConductor Laboratory, Mohali as a brownfield Fab.

India  Semiconductor  Mission  ('ISM'),  the  nodal  agency  has  received  three  (3)  applications under the 'scheme for setting up of semiconductor fabs in India ', and two (2) applications under the  'Scheme  for  setting  up  of  Display  Fabs  in  India'.  Appraisal  process  has  been  completed. However, none of the applications found suitable for approval.  Additionally, ISM has received Six  (6)  applications  under  'Modified  Scheme  for  setting  up  of  Compound  Semiconductors  / Silicon Photonics / Sensors Fab / Discrete Semiconductor Fabs and Semiconductor Assembly, Testing,  Marking and Packaging (ATMP) / OSAT facilities in India'. One (1) application has been approved under this scheme.

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 sector. 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.158/95-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.
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.

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