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Electronics industry seeks Rs 35,000 crore PLI scheme, capital support

The electronics manufacturing industry is urging the government for a Rs 30,000- Rs 35,000 crore production-linked incentive (PLI) scheme for components and sub-assemblies, along with capital expenditure support to back the rising exports of mobile phones and other electronics.

The India Cellular & Electronics Association (ICEA), representing top smartphone brands and manufacturing companies, said the incentive scheme is essential to support the growing demand for electronics components, projected to reach $75-$80 billion by 2026 and $300 billion by 2032, to underpin the manufacturing of $300 billion worth of electronics products by 2026 and $1.2 trillion by 2032.

ICEA said that the scheme aims to increase domestic value addition, especially in mobile phone manufacturing, from the current 18 per cent to 35-40 per cent. Component manufacturing should progress alongside the development of the semiconductor ecosystem currently underway in India.

Push for semiconductor manufacturing in India
In its submission to the Ministry of Electronics and Information Technology, the industry demanded PLI support with a 4-6 per cent incentive structure for manufacturing sub-assemblies (camera modules, display assemblies, vibrator motors, etc), high-end printed circuit boards, thru-hole passive components, and surface-mount components.

The industry recommended an eight-year PLI plan with the flexibility to claim incentives for six years within this period. ICEA proposed that companies committing a threshold investment of Rs 1,000 crore or more in making SMD passive components, lithium-ion cells, and high-end PCBs should receive 40 per cent capex support on an equal basis, along with support for producing raw materials and other inputs for components with an average incentive of 5 per cent over six years.

Reducing reliance on imports
The industry body also noted the urgent need to shift from heavy reliance on imports to fostering an indigenous semiconductor ecosystem, supported by localised PCBA operations, focused circuit design, and increased value addition in product manufacturing.

ICEA further mentioned that the component ecosystem would take at least 2-3 years to commence commercial production. Once established, domestic manufacturing of components should meet 5-10 per cent of global demand within 6-7 years, and international firms should be invited to capture a significant share in both domestic and global component manufacturing markets, the Economic Times reported.

The ICEA also suggested that supply chain ancillary units supporting component manufacturing should receive 25 per cent capex support. Critical sub-assemblies and components such as connectors, mechanics, vibrator motors, camera modules, display assemblies, and speaker modules should receive a 4-6 per cent incentive tied to incremental sales.

The industry sought a 5 per cent interest subsidy for component production on term loans and working capital requirements to mitigate the high cost of finance in India.

Last month, ICEA recommended various measures to advance India’s position in semiconductor product design and IP creation, including encouraging large Indian corporates to invest in semiconductor design and treating chip design and manufacturing as a strategic sector.
In its latest report, the ICEA also suggested establishing an exclusive market exchange for the electronics and hi-tech industry. Business Standard

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