Lok Sabha Question No. 1839 (UNSTARRED), answered on 2023-12-13
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. 1839

TO BE ANSWERED ON 13.12.2023

## ELECTRONIC MANUFACTURING CLUSTERS

## 1839:  SHRI RAJIV PRATAP RUDY:

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

- (a) the  number  of  Electronic  Manufacturing  Clustersthat  have  been  set  up  in  India, State/UT-wise including Bihar;
- (b) the number of MNCs and Indian startups 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  India  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 during the next five years;
- (e) the details share of the country in the total global electronics exports during the last five yearsalong with State-wise exports; and
- (f) the recent steps 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):  Government  of  India's  goal  is  to  broaden  and  deepen  the  country's  electronic manufacturing ecosystem as well as increase India's participation in electronics Global Value Chains (GVCs). 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.As  a  result  of  this  production  of electronics  goods,  export  has  grown  significantly.  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. Ministry of Electronics and Information Technology introduced Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme on 1 st 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, 5 Electronics Manufacturing Clusters over an area of 1,695 acres with project cost of INR 2,219 crore including central Grant-in-aid of INR 1,036 crore have been approved in 5 states across the country. Under the scheme, no application is received from the state of Bihar so far.  In the approved EMCs, 392 companies have taken manufacturing space with projected investment of INR 58, 895 crore and having potential of generating  employment  for  2.63  lakh  people.  Out  of  these,  104  companies  are  already  in production with investment of INR 14,948 crore and provided employment to 67,231 people. Another,  130  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 fromINR 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  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). In  2022-23, the  India's  electronics  exports  was  approximately USD 23.5Billion. The steps taken by the Government  to  transform  India  as  global  electronics  manufacturing  hub  is  placed  at Annexure.

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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 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) 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 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. 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 worldclass 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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