Lok Sabha Question No. 2474 (UNSTARRED), answered on 2024-12-10
Subject: Capex Incentive Schemes
Ministry: COMMERCE AND INDUSTRY
Asked by: Shri Sachithanantham R

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

## LOK SABHA

UNSTARRED QUESTION NO. 2474.

TO BE ANSWERED ON TUESDAY, THE 10 TH  DECEMBER, 2024.

## CAPEX INCENTIVE SCHEMES

## 2474.  SHRI SACHITHANANTHAM R:

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

- (a) whether the Government has implemented production linked, Design linked, Capex Incentive Scheme;
- (b) if so, the objectives of the said schemes;
- (c) whether the objectives have yielded results;
- (d) if so, the details thereof;
- (e) whether the net results of these schemes, in terms of increasing the contribution of the manufacturing sector to the GDP, in terms of increasing employment and the quality of employment of the youth; and
- (f) if so, the details thereof?

## ANSWER

## वाणिज्य एवं उद्योग मंत्रालय में राज्य मंत्री ( श्री णिणिन प्रसाद ) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI JITIN PRASADA)

(a) to (f): Yes  Sir , the  Government  has  implemented  production  linked,  Design linked, Capex Incentive Scheme. The Design Linked Incentive (DLI), Capital  Expenditure  (Capex)  Incentive  Scheme ,  and Production Linked Incentive (PLI) Scheme collectively drive India's Aatmanirbhar Bharat mission by promoting innovation, boosting manufacturing, and reducing  import  dependence.  The  DLI  Scheme  fosters  tech-driven product design, the Capex Scheme supports infrastructure expansion, and  the  PLI  Scheme  incentivizes  production  and  exports  across  key sectors. Together, these initiatives propel  India  toward  economic resilience, reduced import dependency, and enhanced global competitiveness. The scheme  wise  details  are  given  in  following paragraphs.

Modified  Programme  for  Development  of  Semiconductor  and Display Fab Ecosystem in India: Government has approved Semicon India  Programme  with     a  total  outlay  of  Rs  76,000  crore  for  the development of semiconductor and   display manufacturing ecosystem in the country. Fiscal support provided under the programme covers i.

50% of  the  project  cost  on  pari-passu  basis  for  setting  up  of  Silicon Complementary Metal-Oxide-Semiconductor (CMOS) based Semiconductor Fabs in India, ii. 50% of Project Cost on pari-passu basis for setting up of Display Fabs in India, iii. 50% of the Capital Expenditure on pari-passu basis for setting up of Compound Semiconductors / Silicon Photonics (SiPh) / Sensors (including Micro Electro-Mechanical Systems) Fab/ Discrete Semiconductor Fab and Semiconductor Assembly,  Testing,  Marking  and  Packaging  (ATMP)  /  Outsourced Semiconductor Assembly and Test (OSAT) facilities in India.

The programme also provides Product Design Linked Incentive of up to 50% of the eligible  expenditure  subject  to  a  ceiling  of  ₹15  Crore  per application and also 'Deployment Linked Incentive' of 6% to 4% of net sales  turnover  over  5  years  subject  to  a  ceiling  of  ₹30  Crore  per application for incentivising chip design.

Under Semicon India Programme, Government has already approved 5 semiconductor  projects  with  cumulative  investment  of  around  Rs. 1,52,000 crore. Further, 15 semiconductor design companies have also been approved under the Design Linked Incentive Scheme to design chips for Indian products. Additionally, 41 semiconductor  design companies  have  been  approved  for  access  of  the  tools  required  for designing the chips (called EDA tools) which is being made available by National EDA Tool Grid setup at ChipIN Centre at C-DAC Bengaluru.

The  approved  semiconductor  manufacturing  facilities  under  Semicon India    Programme  will  generate  direct  employment  of  about  25 thousand advanced technology jobs and about 60 thousand indirect jobs. Government has also approved modernisation of Semi-Conductor  Laboratory,  Mohali  to  enhance  efficiency  and  cycle time.

## PLI Scheme 2.0 for IT Hardware

To increase domestic production of IT hardware, Government of India has  notified  the  Production  Linked  Incentive  (PLI)  Scheme  2.0  for  IT Hardware  on  29.05.2023  with  an  outlay  of  INR  17,000  crore.  The scheme provides an average incentive of around 5% 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 6 years. The target segment products include: Laptops, Tablets, All-in-One PCs, Servers and Ultra Small Form Factor. PLI Scheme 2.0 for IT Hardware is in its nascent phase and it will take at least two more years for postPLI impact to be visible.

## PLI for Large Scale Electronics Manufacturing Scheme

The Objective of the scheme is to boost domestic manufacturing and attract  investment  in  mobile  phones  value  chain  including  electronic components and semiconductor packaging. Over  the  scheme  tenure, the companies approved under the scheme are expected to generate a total production of about INR 8,12,550 crore, additional investment to the tune of INR 7,000 crore and creation of 2,00,000 additional direct jobs.

Till Oct'2024, the companies approved under the PLI Scheme for LSEM have made cumulative investment of INR 9,349 Cr, leading to cumulative production of INR 6,14,115 Cr and generated additional employment of 1,28,688 (Direct jobs).

## Modified Special Incentive Package Scheme (M-SIPS)

To  offset  disability,  attract  investments  in  electronic  manufacturing, provide a level-playing field and achieve competitiveness in the global market,  Modified  Special  Incentive  Package  Scheme  (M-SIPS)  was launched by the Government in July 2012. The scheme provides 2025% subsidy for investments in capital expenditure for setting up of an electronic manufacturing facility (20% for SEZ Units and 25% for nonSEZ Units). The incentives are available for 44 categories of electronic products  and  product  components  on  reimbursement  basis.  The incentives under the MSIPS were available for ESDM unit situated in any Industrial  Area  across  the  country.  The  Scheme  has  been  closed  to receive new application on 31st Dec 2018.

As on 30 November, 2024, 316 applications with proposed investment of  INR  82,734  crore  are  under  consideration.  Out  of  these  316 applications, 315 applications with proposed investment of INR 80,725 crore and committed incentives of INR 9,980 crore have been approved. Incentives amounting INR 2535.54 crore have been disbursed under the Scheme.

Out  of  315  approved  units,  293  units  have  reported  investment  of INR 45,209  crore  and  275  units  have  started  production. Direct  and indirect employment generated so far is 4,80,614. Total sales (domestic and exports) from the units under production are INR 13,56,824 crore which include export of INR 3,16,344 crore.

## Scheme for Promotion of Electronic Components and Semiconductors

The government has notified and implemented Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) under Capex Incentive Scheme. The scheme was notified on 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.

Under the Scheme, 52 applications are approved with total Project cost of INR 14,797.62 crore involving approved Capex of INR 8,330.61 crore and approved incentive of INR 2,082.65 crore. The total employment generated as of November 2024 is 34,670.

*********