Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)"
State: Central
Ministry: Ministry of Electronics and Information Technology
Department: null
Category: Science, IT & Communications, Business & Entrepreneurship
Beneficiary Type: Business Entity

The scheme aims to offset the disability for domestic manufacturing of components and semiconductors to strengthen the electronics manufacturing ecosystem. Through this scheme, a financial incentive of 25% on capital expenditure to legal entities registered in India.

Benefits:
> **Financial Incentive:**

•	A financial incentive of 25% of eligible capital expenditure is provided to approved units manufacturing goods as per the eligible list annexed to the Scheme.
•	The total incentive under the Scheme is 25% of eligible capital expenditure for an approved application.
•	The incentive is over and above any incentive offered by the State Government or any of its agencies or local bodies.
•	Applicants shall also be eligible to take benefit under any other scheme(s) of the Government of India; however, investments committed under the Modified Special Incentive Package Scheme (M-SIPS) for which incentives have been claimed shall not qualify as eligible investments under SPECS.
> **What Constitutes Eligible Capital Expenditure**

Capital expenditure includes the following:
•	Expenditure on plant, machinery, equipment and associated utilities — including tools, dies, moulds, jigs, fixtures (including parts, accessories, components, and spares thereof); expenditure on packaging, freight/transport, insurance, and erection and commissioning. Associated utilities include captive power and effluent treatment plants; clean rooms; air curtains; temperature and air quality control systems; compressed air, water and power supply; and IT/ITES infrastructure related to manufacturing including servers, software and Enterprise Resource Planning (ERP) solutions.
•	Expenditure on Research and Development (R&amp;D) — including in-house and captive R&amp;D, test and measuring instruments, design tools, software cost (directly for R&amp;D), and expenditure on technology, Intellectual Property Rights (IPR), patents and copyrights.
•	Expenditure on Transfer of Technology (ToT) — including cost of technology and initial technology purchase related to eligible goods.
•	Expenditure on refurbished/used/second-hand plant, machinery and equipment (including associated utilities and R&amp;D) — whether imported or domestically procured — not exceeding 20% of total eligible plant, machinery and equipment. Such equipment must have a minimum residual life of at least 5 (five) years at the time of transfer of assets.
The following are NOT covered as eligible capital expenditure
•	Expenditure on land and building (including factory building/construction).
•	Expenditure on consumables and raw materials used for manufacturing.
> **Sub-Limits within Eligible Capital Expenditure**

•	Associated utilities expenditure: capped at not more than 20% of the total eligible capital expenditure for plant, machinery and equipment.
•	Research and Development (R&amp;D) expenditure: not exceeding 20% of the total eligible capital expenditure for plant, machinery, equipment and associated utilities.
•	Transfer of Technology (ToT) expenditure: not exceeding 10% of the total eligible capital expenditure for plant, machinery, equipment and associated utilities.
•	Refurbished/used/second-hand plant, machinery and equipment: not exceeding 20% of total eligible capital expenditure.
> **Eligible Goods and Minimum Investment Thresholds**

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**Category****Description of Goods****Minimum Investment Threshold**ASurface Mount Technology (SMT) components including Light Emitting Diode (LED) Chips; Chip Modules for Smart Cards, Radio Frequency Identification (RFID) Antenna and Labels, Chip-on-Board (CoB)/System in Package; Passive components (resistors, capacitors, ferrites) for electronic applications; Electromechanical components (transformers, inductors, coils, relays, switches, micro motors, stepper motors, Brushless Direct Current (BLDC) Motors, Connectors, Heat Sinks, Antenna, Speakers, Microphones, etc.) for electronic applications; Magnetrons, Wave guides, Circulators, Couplers, Isolators, Filters, Magnets, Radio Frequency (RF) Components for electronic applications; Printed Circuit Boards (PCBs), PCB Laminates, Prepegs, Photopolymer films, PCB Printing Inks; Printed Flexible Electronics; Sensors, Transducers, Actuators and Crystals for electronic applications; Camera Modules, Vibrator motor/ringer; Universal Serial Bus (USB)/Data Cables, High-Definition Multimedia Interface (HDMI) Cables; Capital goods for all goods covered under SPECS.₹5,00,00,000/- (₹5 Crore)BActive Components — Discrete semiconductor devices (transistors, diodes, etc.); Power semiconductors (Field Effect Transistors (FETs), Metal Oxide Semiconductor Field Effect Transistors (MOSFETs), Thyristors, etc.); Preform of Silica and Optical Fibre; Display Assembly and Touch Panel/Cover Glass Assembly.₹15,00,00,000/- (₹15 Crore)CMicro/Nano-electronic components such as Micro Electro Mechanical Systems (MEMS) and Nano Electro Mechanical Systems (NEMS); Assembly, Testing, Marking and Packaging (ATMP) units.₹25,00,00,000/- (₹25 Crore)DMechanics (plastic and metal parts) for electronic applications.₹75,00,00,000/- (₹75 Crore)ECompound Semiconductors such as Gallium Nitride (GaN), Silicon Carbide (SiC), Gallium Arsenide (GaAs), and Silicon Photonics devices/Integrated Circuits, Optoelectronic components.₹2,50,00,00,000/- (₹250 Crore)FSemiconductor Wafers.₹5,00,00,00,000/- (₹500 Crore)GSemiconductor Integrated Chips (ICs), including Logic [Microprocessors, Microcontrollers, Digital Signal Processors (DSP), Application Specific Integrated Circuits (ASICs), etc.]; Memory; Analogue/Mixed Signal ICs, etc. Display fabrication units including Liquid Crystal Displays (LCD), Light Emitting Diode (LED), Organic Light Emitting Diode (OLED), etc., for electronic applications.₹10,00,00,00,000/- (₹1,000 Crore)<br>

Eligibility:
1. The applicant should be a legal entity registered in India. The applicant may be a Private Limited Company, Public Limited Company, Sole Proprietorship, Partnership, or Limited Liability Partnership registered in India.
1. The applicant should be proposing to invest in a project/unit for the manufacturing of eligible goods as per the list in [Annexure-1](https://www.meity.gov.in/static/uploads/2024/02/SPECS-Guidelines-01062020.pdf) of the SPECS Guidelines.1. Each application shall be treated as a new investment and as an independent application. The application shall be only for single-phase projects; phase-wise applications shall not be considered under the Scheme.
1. There is no restriction on any applicant from making multiple applications and/or for multiple locations.
1. The applicant should ensure that the proposed investment in capital expenditure is greater than or equal to the threshold value for the eligible goods under SPECS (as per [Annexure-1](https://www.meity.gov.in/static/uploads/2024/02/SPECS-Guidelines-01062020.pdf) of the Guidelines). 1. The scheme is applicable for investments in new units as well as expansion of capacity/modernisation and/or diversification of existing units.
1. The minimum investment thresholds are the same for new units or expansion of capacity/modernisation/diversification of existing units.
1. A project/unit proposed under the Scheme may include multiple manufacturing facilities at one or more proposed locations. There is no limit on the number of applications for an applicant.
1. If an application covers more than one product category, the applicable minimum threshold of investment (capital expenditure) shall be the highest of the individual threshold investment for each of the product categories covered.
1. Eligibility under the SPECS Scheme shall not affect eligibility under any other scheme, and vice-versa.
1. The application shall contain the requisite land documents such as a registered sale deed and/or registered rent/lease agreement on the land for a period of not less than 10 years from the date of application in usual circumstances.
1. In case land has been taken on rent/lease for a period less than 10 years, such application shall be processed if there is a renewal clause for extension of the rent/lease agreement in the registered document. If the renewal clause is not present, the application may be referred by the Project Management Agency (PMA) to the Governing Council (GC) for an appropriate decision.
1. In case the land has not been purchased or taken on rent/lease at the time of application, the applicant shall provide definite location/plot details and a suitable document confirming availability of the land; however, the final registered document shall be provided before the submission of the Appraisal Report by PMA for consideration of the Executive Committee (EC).
1. The application shall contain a Financial Closure for the investment required for the complete project. Financial Closure means:

- Firm commitment from the applicant to invest in the project under SPECS in the form of a Board Resolution.
- Sanction letter/Letter of Intent (LoI) from a Bank/Financial Institution (FI)/loan agreement with Bank/FI for the debt portion of the investment proposed.
- Legally binding commitment from equity/unsecured loan providers to provide or mobilise funds, in the form of an agreement backed by a Board Resolution (Board Resolution is not applicable in case of Banks and Financial Institutions; in that case, a sanction letter and/or LoI from the Bank/Financial Institution may be provided).
- Legally binding commitment of funding from internal accruals (applicable in case the applicant has any existing unit; shall be assessed from past performance, including Profit and Loss Account, Cash Flow Statements, etc.).
- Documents showing capability of fund providers in the form of unencumbered liquid funds (not applicable in case of Banks and Financial Institutions).

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Application Process:
[Online]
Step 1: The applicant should visit the official website of the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS).
Step 2: Register using your Permanent Account Number (PAN) as the username. Enter your PAN as the User ID, your password, and the CAPTCHA shown on screen, then click 'Register'.
Step 3: After logging in, fill out the Application Form on the portal. The form has 3 sections:
Section 1: Applicant Details (company structure, company details, credit history, financial details); Section 2: Proposal (eligible goods, projections, size of investment, financial closure details, operations and facilities analysis, market research on product feasibility, regulatory treatment); Section 3: Application Fee Details (proof of application fee submission).
Step 4: A non-refundable application fee must be paid electronically before submission. The fee ranges from ₹10,000/- (for projects below ₹25,00,00,000/-) to ₹1,25,000/- (for projects of ₹10,00,00,00,000/- and above).
Step 5: Attach all required documents and submit the complete application on the portal. On successful submission, you will receive a unique Application ID. Keep this for all future correspondence.
After Registration:Step 6: IFCI Ltd. will check if your application is complete. If incomplete, you will be informed within 15 working days and must complete it within the next 15 working days, or the application will be closed.
Step 7: If your application meets all criteria, the PMA issues an Acknowledgement with your Application ID.
Note: This is NOT an approval. The date of acknowledgement starts your 5-year investment window.
Step 8: PMA appraises your application in detail. Provide any additional information they request.
Step 9: PMA places your application before the EC constituted by MeitY. The EC recommends approval, rejection, or modification.
Step 10: PMA issues the Approval Letter to you, with a copy to MeitY.
(Note: Approval Letter is NOT a guarantee of disbursement.)
Claiming Your Incentive:Step 11: Incur eligible capital expenditure within 5 years from the date of acknowledgement.
Step 12: Commercial production must commence before you can claim the incentive.
Step 13: Log in to SPECS and submit your Claim for Incentive every 6 months. All claims must be on a cash basis, not accrual. Refer to the claim manual: Click Here.
Step 14: PMA verifies your claim through documents and/or site visits. They will physically verify at least 30% of the eligible capital expenditure items.
Step 15: PMA issues a Sanction Letter approving your claim.
Step 16: Submit the Integrity Compliance Undertaking, Indemnity Bond, and any other required documents.
Step 17: PMA disburses the incentive immediately after all formalities are complete.
Note: You must remain in commercial production for at least 3 years from the date of commencement of production, or 1 year from receipt of the last incentive — whichever is later.

Documents Required:
Company / Applicant Details:Certified Copy of Memorandum of Association (MOA) and Articles of Association (AOA) or Equivalent Registration Document. (In case of Sole Proprietorship, any document deemed appropriate.)
Statutory Auditor / Company Secretary Certificate showing Shareholding Pattern (indicating number of shares and investment).
Chartered Accountant (CA) Certified Copies of Permanent Account Number (PAN) and Goods and Services Tax (GST) Certificate.
Self-Certified Copies of Brief Profile of Chairman, Chief Executive Officer (CEO), Chief X Officers (CXOs), Directors, Key Managerial Persons (KMPs), Key Promoters, and Authorised Representatives along with their PAN / Director Identification Number (DIN).
Chartered Accountant (CA) Certified Copies of Annual Reports including Annual Financial Reports along with schedules for the past 3 years (most recent reports to be provided).
Certificate from Company Secretary / Board of Directors regarding Credit History — details of presence of Applicant / Non-Independent Directors / Promoters in Reserve Bank of India (RBI) Defaulter and Wilful Defaulter Lists, Securities and Exchange Board of India (SEBI) Debarred List, and Credit Information Bureau (India) Limited (CIBIL) Score.
Financial Closure Documents:True Certified Copy of Board Resolution highlighting proposed products, investment schedule from different sources (term loan, unsecured loan, equity, etc.), intent to invest under SPECS, and project location.
Chartered Accountant (CA) Certified Copies of Annual Reports for the past 3 years (in Microsoft Excel format).
For Term Loan: Sanction Letter; Loan Agreement; Appraisal Note; Loan Account Statement (if disbursed).
For Internal Accruals: Documents supporting fund availability.
For Equity: Documents supporting fund availability; Equity Subscription Agreement; Commitment Letters from equity providers.
For Unsecured Loan: Documents supporting fund availability; Unsecured Loan Agreements; Commitment Letters from unsecured loan providers.
Company Secretary Certified Copy of the Sanction Letter and Term Loan Agreement for Debt.
Company Secretary Certified Copy of Board Resolution for Equity / Unsecured Loans (or equivalent for other legal entities/proof of equity / unsecured loans having been brought in).
Capital Expenditure Documents:Complete List of Capital Goods proposed to be purchased along with their Quotations and Purchase Orders (where a purchase order is issued).
Details of Used / Second Hand / Refurbished Plant, Machinery, Equipment and Associated Utilities (if applicable).
Copy of Technology Agreements with Technology Provider (if applicable).
Land / Location Documents:Documentation showing Ownership of Land (Leased / Owned) for the Project.
Documentation showing Possession of the building (Leased / Owned) for the Project.
Registered Sale Deed and/or Registered Rent / Lease Agreement on the Land for a period of not less than 10 years from the date of application, along with documents showing the location is in an industrial area.
Other Documents / Undertakings:Chartered Accountant Certificate (with Membership Number) showing Shareholding Pattern (indicating number of shares and investment).
Self-Certificate that the applicant is not blacklisted by any Government Department.
Undertaking stating details of Assistance Sought / Received from the Government of India apart from SPECS.
Undertaking a number of Proposed Manufacturing Set-Ups.
Employment Generation Details.
Year-Wise Production Capacity till Project Completion.
Implementation Schedule with timelines for: Construction of Building; Ordering of Machines; Receipt and Installation of Machines; Pilot Production; and Commercial Production.
Overview of Manufacturing Process along with Key Raw Materials.
Proof of Application Fee Submission (non-refundable, paid electronically).
Integrity Compliance Undertaking — Format-A (to be provided by all applicants whose applications or claims are under consideration for approval or disbursement of incentive) and Format-B (to be provided after submission of claims for disbursement and before release of funds) — duly signed by Chief Executive Officer (CEO) / Managing Director (MD) / Director.