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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) have been notified.
Electronics manufacturing in India has grown rapidly with a CAGR of around 25% during the last 4 years, with domestic production of electronics hardware touching $70 bn in 2018-19. The electronics manufacturing industry currently provides employment for over 20,00,000 people in India, of which mobile manufacturing alone accounts for over 6,00,000 jobs. 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.
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.
Incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India
Mobile Phones and Specified Electronic Components
Eligibility shall be subject to thresholds of incremental investment and incremental sales of manufactured goods
Five years subsequent to the base year as defined (FY 19-20)
|Segment||Proposed Incentive Rate||Incremental Investment over Base Year||Incremental Sales of Manufactured Goods over Base Year|
|Mobile Phones (Invoice value of INR 15,000 and above) *||Year 1: 6%
Year 2: 6%
Year 3: 5%
Year 4: 5%
Year 5: 4%
|INR 1,000 Crore over 4 Years Cumulative Minimum (Crore):
Year 1: 250
Year 2: 500
Year 3: 750
Year 4: 1,000
|Year 1: INR 4,000 Crore
Year 2: INR 8,000 Crore
Year 3: INR 15,000 Crore
Year 4: INR 20,000 Crore
Year 5: INR 25,000 Crore
|Mobile Phones (Domestic Companies) **||INR 200 Crore over 4 Years Cumulative Minimum (Crore):
Year 1: 50
Year 2: 100
Year 3: 150
Year 4: 200
|Year 1: INR 500 Crore
Year 2: INR 1,000 Crore
Year 3: INR 2,000 Crore
Year 4: INR 3,500 Crore
Year 5: INR 5,000 Crore
|Specified Electronic Components||INR 100 Crore over 4 Years Cumulative Minimum (Crore):
Year 1: 25
Year 2: 50
Year 3: 75
Year 4: 100
|Year 1: INR 100 Crore
Year 2: INR 200 Crore
Year 3: INR 300 Crore
Year 4: INR 450 Crore
Year 5: INR 600 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.
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.
Electronic Components, Semiconductors, Specialized Sub-Assemblies and Capital Goods for these items
Applicable to Investments in New Units as well as Expansion of Existing Units
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
Incentive of 25% on Capital Expenditure pertaining to plant, machinery, equipment, associated utilities and technology, including Research & Development on reimbursement basis
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.
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.
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
EMC 2.0 will be open for applications for 3 years. A further period of 5 years will be available for disbursement of funds
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