Reasons to Invest

India has a large and rapidly growing electronics market, driven by an increasing middle-class population, rising disposable incomes, and growing consumer demand for electronic products. Investing in the electronic components sector allows companies to tap into this expanding market.
$30 Bn fiscal incentives earmarked for manufacturing of electronics and its allied sectors. This includes lucrative incentives for component manufacturing as well.
India is home to a young and skilled workforce, providing a competitive advantage in terms of labour availability and costs. This abundant pool of talent can help companies establish efficient and cost-effective manufacturing operations.

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Research Content Provider

Location Analysis

Policy Advisory/Representation

Stakeholders Meeting

Issue Resolution

Regulatory Clearance Facilitation

FDI Norms

100% FDI is allowed under the automatic route. Under Defence electronics, FDI up to 49% is allowed under automatic route and beyond 49% through government approval.
100%

FDI Allowed under Automatic route

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100% FDI is allowed under the automatic route. Under Defence electronics, FDI up to 49% is allowed under automatic route and beyond 49% through government approval.

Government Support

National Policy on Electronics, 2019 (NPE 2019)

The National Policy on Electronics is a policy roadmap that has been created to position India as a global hub of 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.
In order to position India as a global hub for ESDM and push further the vision of the National Policy on Electronics (NPE) 2019, the following three schemes were notified on 1st Apr, 2020.

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

Seeks to boost large-scale domestic manufacturing by offering an incentive of 4-6% on incremental sales over a period of 5 years for mobile phones and specified electronic components.

A microsite containing more information on this scheme can be found here.

Production Linked Incentive Scheme (PLI) for IT Hardware

Offers an incentive of 2-4% on incremental sales over a period of 4 years for manufacturing of Laptops, Tablets, All-in-one PCs, and Servers.

A microsite containing more information on this scheme can be found here.

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

Incentives of 25% is offered on capital expenditure pertaining to plant & machinery, associated utilities, and technologies on a reimbursement basis.

A microsite containing more information on this scheme can be found here - https://www.investindia.gov.in/schemes-for-electronics-manufacturing

Modified Electronics Manufacturing Clusters Scheme (EMC 2.0)

Incentives of 50% of project cost (subject to ceilings) offered to enable the setting up of world-class electronics infrastructure.

A microsite containing more information on this scheme can be found here - https://www.investindia.gov.in/schemes-for-electronics-manufacturing

Phased Manufacturing Programme (PMP)

Roadmap for tariff rationalization to promote depth in manufacturing.

Public Procurement Order (PPO), 2017

PPO 2017 has been notified to encourage ‘Make In India’ and promote manufacturing and production of goods and services in India with a view to enhancing income and employment.

Electronics Development Fund (EDF)

“Fund of funds” to promote innovation, IP creation, Research & Development (R&D) and commercialization.

Major Investors

Value Chain Assessment

Growing Electronics Ecosystem

Product Profiles

The domestic market for Capacitors stood at $1.01 Bn of which $0.48 Bn was catered by domestic production. Exports were valued at $0.14 Bn.
The domestic market for Resistors stood at $0.37 Bn of which $0.12 Bn was catered by domestic production. Exports were valued at $0.04 Bn.
All figures shown are for FY19.

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FAQ

FAQs

Is eligibility under the PLI Scheme for a given year achieved if one of the two threshold criteria namely incremental investment and incremental sale of manufactured goods over the base year are met?

The applicant company will have to meet both threshold criteria i.e. incremental investment and incremental sale of manufactured goods over the base year to be eligible for disbursement of incentive under the scheme for a given year.

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How will the consolidated global manufacturing revenue of the applicant (including its Group Companies), in the Target Segment, be calculated if same group company is claimed and considered for two or more applicant companies?

In case the manufacturing revenue, in the target segment, of an entity (group company) is claimed and considered for two or more applicant companies, the manufacturing revenue of such entity in the target segment will be equally divided among the applicants that are claiming revenue of such entity. Only such share of manufacturing revenue in the target segment, that is obtained after division of manufacturing revenue of that entity (group company), will be considered for determining qualification for such applicant under the scheme.

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What if the Consolidated Global Manufacturing Revenue of the applicant (including Group Companies) in the Target Segment is available in currency other than INR?

If the Consolidated Global Manufacturing Revenue of the applicant company (including Group Companies) is available in a currency other than INR, the INR equivalent amount may be computed by applying an average of the exchange rate notified by the Reserve Bank of India as on the first day and last day of the reporting period.

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What are the criteria for determining Eligibility under the PLI Scheme?

Eligibility under the Scheme shall be subject to thresholds of Incremental Investment and Incremental Sales of Manufactured Goods (covered under Target Segments) over the base year as defined. An applicant must meet threshold criteria to be eligible for disbursement of incentive for the year under consideration.

To meet the threshold criteria of Incremental Investment for any year, the cumulative value of investment done till such year (including the year under consideration) over the Base Year (2019-20) shall be considered.

In order to meet the threshold criteria of Incremental Sales of Manufactured Goods covered under Target Segments for any year, the Total Sales of Manufactured Goods covered under Target Segments for such year over the Base Year, irrespective of Invoice Value (whether below or above INR 15,000 in case of Mobile Phones) shall be considered.

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What does Incremental Investment over Base Year in the PLI Scheme mean?

To meet the threshold criterion for Incremental Investment in any year, the cumulative value of investment done till such year (including the year under consideration) over the Base Year i.e. 2019-20 shall be considered. For example, in case of Mobile Phones (with invoice value of INR 15,000 and above), the applicant company must invest INR 250 crore or more by 31.03.2021 to achieve threshold for incremental investment in that year. Similarly, a cumulative investment of INR 500 crore by 31.03.2022, INR 750 crore by 31.03.2023 and INR 1,000 crore by 31.03.2024 will have to be made to remain eligible under the scheme.

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