The government’s Cabinet has announced it will offer a financial incentive of 25% of capital expenditure for the manufacturing of goods that constitute the supply chain of electronic products.
The move will be carried out under the Scheme for the Promotion of the manufacturing of Electronic Components and Semiconductors (SPECS).
A press release claimed that the scheme will help offset the disability for the domestic manufacturing of electronic components and semiconductors to strengthen the manufacturing ecosystem in the country.
The proposal, when implemented, will lead to the development of the Indian electronic components manufacturing industry. The following are the expected outcomes, in terms of measurable indicators, for the scheme:
- Growth in the manufacturing ecosystem in the country and the deepening of the electronics value chain.
- New investments in the electronics sector to the tune of at least IN 20,000 crores (about US $2.6 million).
- The scheme is expected to create direct employment of approximately 150,000 job placements in manufacturing units. This includes indirect employment of about three times of direct employment as per industry estimates. Thus, the total employment potential of the scheme is approximately 600,000.
- It will reduce the country’s dependence on the imports of components by large-scale domestic manufacturing, which could also enhance the digital security of the nation.
The aim of the National Policy on Electronics 2019 (NPE 2019) is to position India as a global hub for electronics system design and manufacturing (ESDM) by encouraging and driving capabilities in the country to develop core components, including, chipsets, and creating an enabling environment for the industry to compete globally.
A vibrant electronic components manufacturing ecosystem is vital for the overall long-term and sustainable growth of electronics manufacturing in India and essential to achieving a net positive balance of payments (BoP).
Therefore, the scheme proposes to provide an incentive of 25% on capital expenditure on plant machinery, equipment, associated utilities and technology, including for research and development to the industrial units making investments for the manufacturing of electronic components, semiconductors, ATMP, specialised sub-assemblies, and capital goods for items in specified categories.
This will cater to all segments of electronics manufacturing such as mobile, consumer, industrial, automotive, medical, strategic, and power electronics as well as telecom equipment and computer hardware.
The Cabinet also approved financial assistance to the Modified Electronics Manufacturing Clusters (EMC2.0) Scheme to develop the country’s infrastructure and common facilities and amenities through EMCs.
The government expects that these EMCs will aid the growth of the ESDM sector, help the development of the entrepreneurial ecosystem, drive innovation, and catalyse the economic growth of the region by attracting investments in the sector and increasing employment opportunities and tax revenues.
The EMC 2.0 Scheme will support the setting up of both EMCs and common facility centres (CFCs). For the purpose of this scheme, an EMC would set up in geographical areas of certain minimum extent, preferably contiguous, where the focus is on the development of basic infrastructure, amenities, and other common facilities for the ESDM units.