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Schemes for Electronics Manufacturing

In order to position India as a global hub for Electronics System Design and Manufacturing (ESDM) and push further the vision of the National Policy on Electronics (NPE) 2019, three schemes namely the Production Linked Incentive Scheme (PLI), Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and Modified Electronics Manufacturing Clusters Scheme (EMC 2.0) were notified in April 2020. A fourth scheme, namely the Production Linked Incentive Scheme (PLI) for IT Hardware was notified in March 2021.

Electronics manufacturing in India has grown rapidly with a CAGR of around 23% during the last 5 years, with domestic production of electronics hardware touching $76 bn in 2019-20.  The electronics manufacturing industry currently provides employment for over 2 million people in India. To further facilitate large-scale manufacturing, development of a supply chain ecosystem, and building of new manufacturing clusters in the country, each electronic manufacturing scheme has been carefully constructed to incentivize the electronics manufacturing industry.

Schemes for Electronics Manufacturing

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Scheme 1

Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing

Overview

The Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing proposes a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain including mobile phones, electronic components and ATMP units. Production Linked Incentives of up to INR 40,951 crores will be awarded over a period of 5 years.

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View PLI Scheme Round 2 in other languages

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Scheme
  • English
Guidelines
  • English

Round 1

Current Status: Closed for Application

View Details

 

Round 2

Current Status: Closed for Application

View Supplementary Guidelines

Highlights

  • Incentive

    Incentive

    Incentive of 3% to 5% on incremental sales (over base year) of goods manufactured in India

  • Target Segments

    Target Segments

    Specified Electronic Components

  • Eligibility

    Eligibility

    Eligibility shall be subject to thresholds of incremental investment and incremental sales of manufactured goods

  • Tenure of the Scheme

    Tenure of the Scheme

    4 years applicable from 01.04.2021

Target Segments Eligible under PLI Scheme

  • Specified Electronic Components
    • SMT components
    • Discrete semiconductor devices including transistors, diodes, thyristors, etc.
    • Passive components including resistors, capacitors, etc. for electronic applications
    • Printed Circuit Boards (PCB), PCB laminates, prepregs, photopolymer films, PCB printing inks
    • Sensors, transducers, actuators, crystals for electronic applications
    • System in Package (SIP)
    • Micro / Nano-electronic components such as Micro Electromechanical Systems (MEMS) and Nano Electromechanical Systems (NEMS)
    • Assembly, Testing, Marking and Packaging (ATMP) units

Eligibility

Target Segment Incentive Rate Incremental Investment over Base Year Incremental Sales of Manufactured Goods over Base Year
Specified Electronic Components Year 1: 5%
Year 2: 4%
Year 3: 4%
Year 4: 3%		 INR 25 Crore over 4 Years Cumulative Minimum (Crore):
Year 1: 5
Year 2: 11
Year 3: 18
Year 4: 25		 Year 1: INR 15 Crores
Year 2: INR 35 Crores
Year 3: INR 60 Crores
Year 4: INR 100 Crores

Process Flow

Step One
Step One

Application Process

  1. Submission of Application – Applicant
  2. Prima Facie Examination – Project Management Agency (PMA)
  3. Letter of Acknowledgement issued – PMA
    • Letter of Acknowledgement to be issued within 15 working days post completion of examination
  4. Application Appraisal – PMA
  5. Application Approval (based on decision of Empowered Committee and Competent Authority) – PMA
    • Letter of Approval to be issued within 5 working days of approval from Competent Authority
step two
Step Two

Baseline Determination Process

  1. Submission of Documents to PMA – Applicant
  2. Determination of Baseline (within 30 working days from submission) – PMA
process
Step Three

Disbursement Process

  1. Submission of Claim for Disbursement of Incentive – Applicant
  2. Verification of Eligibility and Assessment of Incentive – PMA
  3. Approval of Disbursement Claim (based on decision of Empowered Committee and Competent Authority) – PMA
  4. Disbursement of Funds – PMA
Scheme 2

Production Linked Incentive Scheme (PLI) for IT Hardware

The Production Linked Incentive Scheme for IT Hardware proposes a financial incentive to boost domestic manufacturing and attract large investments in the value chain. The scheme seeks to incentivise companies to utilise the existing installed capacity to fulfil the increasing domestic demand. Product Linked Incentives of upto INR 7,300 crore will be awarded over a period of 4 years.

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Scheme
  • English

Current Status: Closed for Application

Highlights

  • Incentive

    Incentive

    Incentive of 2% to 4% on incremental sales (over base year) of goods manufactured in India

  • Target Segments

    Target Segments

    Laptops, Tablets, All-in-One PCs, and Servers.

  • Eligibility

    Eligibility

    Eligibility shall be subject to thresholds of incremental investment and incremental sales of manufactured goods

  • Tenure of the Scheme

    Tenure of the Scheme

    4 years applicable from 1 April 2021

Eligibility

Segment Proposed Incentive Rate Incremental Investment after 31 March 2021 Incremental Sales of Manufactured Goods over Base Year
IT Hardware Companies*
(I) Laptops (Invoice value of INR 30,000 and above)
(II) Tablets (Invoice value of INR 15,000 and above)
(III) All-in-One PCs
(IV) Servers		 Year 1: 4%
Year 2: 3%
Year 3: 2%
Year 4: 2% / 1%		 INR 500 Crore over 4 Years Cumulative Minimum (INR Crore):
Year 1: 50
Year 2: 100
Year 3: 300
Year 4: 500		 Year 1: INR 1,000 Crore
Year 2: INR 2,500 Crore
Year 3: INR 5,000 Crore
Year 4: INR 10,000 Crore
Domestic Companies**
(I) Laptops
(II) Tablets
(III) All-in-One PCs
(IV) Servers		 INR 20 Crore over 4 Years Cumulative Minimum (INR Crore):
Year 1: 4
Year 2: 8
Year 3: 14
Year 4: 20		 Year 1: INR 50 Crore
Year 2: INR 100 Crore
Year 3: INR 200 Crore
Year 4: INR 300 Crore

*For eligibility all Incremental Sales of Manufactured Goods (covered under target segments) irrespective of Invoice Value shall be considered.

**Domestic Companies shall be defined as those which are owned by resident Indian citizens as defined in the FDI Policy Circular of 2017. A company is considered as ‘Owned’ by resident Indian citizens if more than 50% of the capital in it is beneficially owned by resident Indian citizens and/or Indian companies, which are ultimately owned and controlled by resident Indian citizens.

Localisation Plan

Manufactured Goods covered under the Target Segment, the net sales of which are considered for determining eligibility and incentive amount due under the Scheme must meet the following criteria for localization:

S. No. Timeline Sub-Assembly to be Localized Criteria Applicable Incentive
1 01 April 2021 Not Applicable 4%
2 01 April 2022 onwards PCB Assembly Assembled domestically by the applicant company itself 3%
3 01 April 2023 onwards Battery Packs Assembled domestically, either by the applicant company itself or through one of its vendors. (not applicable for All-in-One PCs and Servers) 2%
4 01 April 2024 onwards

Power Adaptors / SMPS

Cabinets / Chassis / Enclosures		 Assembled domestically, either by the applicant company itself or through one of its vendors. 2%
OR
  01 April 2024 onwards Power Adaptors / SMPS Assembled domestically, either by the applicant company itself or through one of its vendors. 1%

Process Flow

Step one
Step One

Application Process

  1. Submission of Application – Applicant
  2. Prima Facie Examination – Project Management Agency (PMA)
  3. Letter of Acknowledgement issued – PMA
    • Letter of Acknowledgement to be issued within 15 working days post completion of examination
  4. Application Appraisal – PMA
  5. Application Approval (based on decision of Empowered Committee and Competent Authority) – PMA
    • Letter of Approval to be issued within 5 working days of approval from Competent Authority
Step two
Step Two

Baseline Determination Process

  1. Submission of Documents to PMA – Applicant
  2. Determination of Baseline (within 30 working days from submission) – PMA
Step three
Step Three

Disbursement Process

  1. Submission of Claim for Disbursement of Incentive – Applicant
  2. Verification of Eligibility and Assessment of Incentive – PMA
  3. Approval of Disbursement Claim (based on decision of Empowered Committee and Competent Authority) – PMA
  4. Disbursement of Funds – PMA
Scheme 3

Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)

Overview

India has the potential to become a global hub for components manufacturing due to availability of cost-effective skilled manpower, fast improving infrastructure and the Government’s push for Ease of Doing Business in the country. The size of Indian electronic components market has increased at a CAGR of 32% to $20.8 bn in 2018-19. Moreover, the market opportunity for electronic components in India is expected to be around $200 bn by 2025.

The Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) aims to strengthen the manufacturing ecosystem for electronic components and semiconductors. Target manufacturing of electronic components and semiconductors through the scheme will help meet domestic demand, increase value addition and promote employment opportunities in this sector.

Incentives of up to INR 3,285 crore will be awarded under the Scheme over a period of 8 years.

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Scheme
  • English
Guidelines
  • English

Highlights

  • Incentive Icon

    Incentive

    Incentive of 25% on Capital Expenditure pertaining to plant, machinery, equipment, associated utilities and technology, including Research & Development on reimbursement basis

  • Segments Icon

    Target Segments

    Electronic Components, Semiconductors, Specialized Sub-Assemblies and Capital Goods for these items

  • Process Icon

    Eligibility

    Applicable to Investments in New Units as well as Expansion of Existing Units

  • Calendar Icon

    Tenure of the Scheme

    SPECS will be open for applications for 3 years. Investments made within 5 years from the date of acknowledgement will be eligible for receiving incentive

Process Flow

one
Step One

Application Process

  1. Submission of Application – Applicant
  2. Prima Facie Examination – Project Management Agency (PMA)
  3. Letter of Acknowledgement issued – PMA
    • Letter of Acknowledgement to be issued within 15 working days post completion of examination
  4. Application Appraisal – PMA
    • Appraisal Report (AR) to be prepared within 30 working days of submission of application
  5. Application Approval – PMA (based on decision of Executive Committee)
    • Letter of Approval to be issued within 5 working days of EC meeting
two
Step Two

Disbursement Process

  1. Submission of Claim for Disbursement of Incentive – Applicant
  2. Verification of Claims and Application for Incentives – PMA
    • Verification Report to be issued by the PMA within 15 working days from the date of submission of claim
    • Communication to applicant regarding approval to be sent within 15 working days of issuing Verification Report
  3. Disbursement of Funds – PMA
    • Sanction Letter to be issued and Claim to be processed with 10 working days of receiving documents
    • Disbursement of Funds within 5 working days of all formalities
Scheme 4

Modified Electronics Manufacturing Clusters Scheme (EMC 2.0)

Overview

The Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme seeks to strengthen the infrastructure base for the electronics industry and deepen the electronics value chain in India. The development of industry-specific facilities like Common Facility Centers, Ready Built Factory, Sheds/Plug and Play facilities will not only strengthen supply chain responsiveness and promote the consolidation of suppliers but also decrease time-to-market and lower logistics costs. EMC 2.0, therefore, provides financial incentives for creating quality infrastructure as well as common facilities and amenities for electronics manufacturers. Financial Incentives of up to INR 3,762 Crore will be disbursed over a period of 8 years.

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Apply Here
Scheme
  • English
Guidelines
  • English

Highlights

  • Finance Icon

    Incentive

    Financial incentives of up to 50% of project cost will be awarded, subject to a ceiling of INR 70 crore for every 100 acres of land

  • Highlight Icon

    Project Implementing Agency (PIA)

    Applications under the scheme can be made by State Governments, State Implementing Agencies, Central Public Sector Units (CPSU), State Public Sector Units (SPSU), Industrial Corridor Development Corporation (ICDC), etc.

  • Anchor Icon

    Anchor Units

    Electronics Manufacturing companies with a commitment to purchase/lease a minimum of 20% of the land area and invest a minimum of INR 300 crore

  • Tenure Icon

    Tenure of the Scheme

    EMC 2.0 will be open for applications for 3 years. A further period of 5 years will be available for disbursement of funds

Eligibility

  • Requirement of Anchor Units
    • Purchase/lease at-least 20% of the land area
    • A minimum investment commitment of INR 300 crore (INR 150 Crore for North-Eastern States, Hill States, UTs)
  • EMC Projects
    • Financial incentives of up to 50% of project cost will be awarded, subject to a ceiling of INR 70 crore for every 100 acres of land
    • New Projects:
      • Minimum Land Area: 200 acres (100 acres for North-Eastern States, Hill States, UTs)
      • Overall ceiling: INR 350 crore per project
  • Expansion-Related Projects
    • Minimum Land Area: 100 acres adjoining (50 acres adjoining for North-Eastern States, Hill States, UTs)
    • 80% of saleable/leasable land should be allotted to ESDM units
    • At least 50% of land allotted should have started production activity
  • Common Facility Centres (CFC)
    • 75% of the project cost will be awarded, subject to a ceiling of INR 75 crore
    • 5 electronics manufacturing units identified as users
       

Team

  • Senior Investment Specialist

    Rohan Thomas Abraham

  • Lakshya Kumar Sharma

    Lakshya Kumar Sharma

  • Prashasti Rohatgi

    Prashasti Rohatgi

  • Amulya Choudhary

    Amulya Choudhary

Contact Us

Write to us and we will get in touch with you shortly

esdm@investindia.org.in

Phone no. +91-11-23048155