Giving a massive push to foster indigenous electronics manufacturing, lately, the Union Cabinet has approved three new schemes. The three schemes are said to considerably boost large-scale electronics manufacturing in India. The new announcement from the Union Cabinet also includes a production-linked incentive scheme, with a total outlay of almost Rs. 48,000 crore.
Led by PM Modi, the cabinet has approved the Production Incentive Scheme (PLI) for Large Scale Electronics Manufacturing. It has nudged financial assistance to the Modified Electronics Manufacturing Clusters (EMC2.0), and financial incentive of 25 per cent of capital expenditure for the manufacturing of goods.
The electronic components manufacturing will cement a new ecosystem for the complete electronics industry as it plays like the heart of electronics manufacturing. Till today, India heavily relies on China for semiconductors and other electronic components.
According to the Electronic Industries Association of India (ELCINA), the electronic components market in India has increased from Rs 68,342 crore in 2015-16 to Rs 1,31,832 crore in 2018-19. Domestic production of electronic components is valued at approximately Rs 63, 380 crore, of which around Rs 48,803 crore is domestically consumed.
“The three schemes together will enable large-scale electronics manufacturing, a domestic supply chain ecosystem of components and a state-of-the-art infrastructure and common facilities for large anchor units and their supply chain partners,” Minister of Electronics and IT Ravi Shankar Prasad said.
The schemes are expected to attract new investments worth at least Rs 50,000 crore in the sector, while generating more than five lakh direct and 15 lakh indirect jobs.
The production-linked incentive scheme aims to attract large investments in mobile phone manufacturing and specified electronic components, including assembly, testing, marking and packaging (ATMP) units, at a budgetary outlay of Rs 40,995 crore for five years.
The scheme will offer an incentive of 4-6% on incremental sales of goods manufactured in India and is expected to create a total of 8 lakh jobs.
“Domestic value addition for mobile phones is expected to rise to 35-40% by 2025 from the current 20—25% due to the impetus provided by the scheme,” an official statement said.
For the ‘Scheme for Promotion of Manufacturing of Electronics Components and Semiconductors’ the outlay has been kept at Rs. 3,285 crore over eight years and is expected to create about 6 lakh jobs. “The scheme will provide a financial incentive of 25% on capital expenditure for the identified list of electronic goods… and will be applicable to investments in new units and expansion of capacity/ modernisation and diversification of existing units.”
The third scheme, Electronics Manufacturing Clusters (EMC) 2.0, aims at creating quality infrastructure with a minimum area of 200 acres along with industry-specific facilities such as common facility centres, ready-built factory sheds/ plug-and-play facilities at an outlay of Rs. 3,762.25 crore over eight years.
The minister said that the production of mobile phones in the country has gone up 8 times in last 4 years from around Rs 18,900 crore in 2014-15 to Rs 1.7 lakh crore in 2018-19 and the domestic demand is almost completely being met out of domestic production.