Govt aims to make India a manufacturing hub in global value chain for electronics

Government of India’s goal is to make India a significant Electronic System Design and Manufacturing hub in Global Value chain for Electronics as part of its AtmaNirbhar Bharat Economic policies.

As part of this, Government is broadening and deepening the electronics manufacturing ecosystem in the country. To establish India as a global leader in electronics manufacturing, Government of India has launched many flagship schemes which are aimed at “Atmanirbhar Bharat – A self-reliant India” under the aegis of National Policy on Electronics 2019 (NPE 2019). The Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) is a step in this direction. It was notified on April 01, 2020 and provides financial incentive of 25% on capital expenditure for the identified list of electronic goods that comprise downstream value chain of electronic products, i.e., electronic components, semiconductor / display fabrication units, ATMP units, specialized sub-assemblies and capital goods for manufacture of aforesaid goods. The scheme is open to receive applications till 31.03.2023. As on November 30, 2022, thirty-two (32) applications with total project cost of Rs.11,130 crore. The total employment generation potential of the approved applications is 32,457 (Thirty-two thousand Four hundred and fifty-seven). The details are attached at Annexure.

Government of India has taken strategic steps and initiatives to broaden and deepen the country’s electronic manufacturing ecosystem. At this juncture, National Policy on Electronics 2019 (NPE 2019) envisions positioning India as a global hub for 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. Apart from SPECS, Government of India has launched many flagship schemes, the details of which are given below:

Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing was notified on 1st April, 2020. The Scheme extends an incentive of 6% to 4% on incremental sales (over base year) of goods under target segments that are manufactured in India to eligible companies, for a period of five (5) years.

Sixteen (16) companies have been approved under the first round of PLI Scheme for Large Scale Electronics Manufacturing.

After the success of the First Round of PLI Scheme in attracting investments in mobile phone and electronic components manufacturing, Second Round of the PLI Scheme for Large Scale Electronics Manufacturing was launched on 11.03.2021 for incentivising Electronic Components. Under the Second Round, incentives of 5% to 3% shall be extended on incremental sales (over base year i.e., FY 2019-20) of goods manufactured in India and covered under the target segment, to eligible companies, for a period of four (4) years. Sixteen (16) companies have been approved under the second round of PLI Scheme for Large Scale Electronics Manufacturing.

In furtherance of the vision of AatmaNirbhar Bharat, the Cabinet approved the comprehensive program for the development of a sustainable semiconductor and display ecosystem in the country with an outlay of ₹ 76,000 crore (>10 billion USD). The program will usher in a new era in electronics manufacturing by providing a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design. Under the aforesaid program, following four schemes have been introduced:

• Modified Scheme for setting up of Semiconductor Fabs in India – The Scheme extends a fiscal support of 50% of the project cost for setting up of Silicon CMOS based Semiconductor Fab in India.
• Modified Scheme for setting up of Display Fabs in India- Scheme extends fiscal support of up to 50% of Project Cost for setting up of Display Fabs in India.
• Modified Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab / Discrete Semiconductors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities in India – The scheme extends a fiscal support of 50% of the Capital Expenditure
• Design Linked Incentive (DLI) Scheme – The scheme provides “Product Design Linked Incentive” of up to 50% of the eligible expenditure subject to a ceiling of ₹15 Crore per application and “Deployment Linked Incentive” of 6% to 4% of net sales turnover over 5 years subject to a ceiling of ₹30 Crore per application.

As laid down in the scheme guidelines the incentive will be available to the approved projects under the scheme for investment made within 5 years from the date of acknowledgement of the application subject to capital expenditure meeting the minimum threshold value and commencement of commercial production, and compliance to other terms and conditions stipulated in Scheme / Guidelines / Approval Letter.

CT Bureau