Cabinet okays schemes to boost electronics manufacturing

The Union Cabinet has taken major decisions to enhance manufacturing in the electronic components, semiconductors and mobile segments.

In its meeting on Friday, the Cabinet approved 'production-linked incentive scheme (PLI)' scheme for promoting manufacturing of electronic components and semiconductors' (SPECS) and Electronics Manufacturing Clusters (EMC) 2.0'.

The PLI scheme is proposed to offer a production-linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components, including assembly, testing, marking and packaging (ATMP) units, an official statement said.

It will extend an incentive of 4 per cent to 6 per cent on incremental sales (over base year) of goods manufactured in India and covered under target segments to eligible companies for a period of five years subsequent to the base year as defined.

Addressing the media here on Saturday, Union Minister for Electronics and IT, Ravi Shankar Prasad said that Centre has earmarked a budgetary outlay of Rs 40,995 crore for five years under this scheme.

As a result of the scheme, the domestic value addition for mobile phones is expected to rise to 35-40 per cent by 2025 from the current level of 20-25 per cent, as per the statement and the total employment (direct and indirect) potential of the scheme is around 8 lakh jobs.

Under the scheme for 'Promotion of Manufacturing of Electronics Components and Semiconductors', the government will provide financial incentive of 25 per cent on capital expenditure for the identified list of electronic goods that comprise downstream value chain of electronic products, including electronic components, semiconductor or display fabrication units among others.

The government has earmarked a budget outlay of Rs 3,285 crore over a period of eight years. The scheme is expected to create around 6 lakh direct and indirect jobs.

It will be applicable to investments in new units and expansion of capacity or modernisation and diversification of existing units.

The scheme will be open for applications initially for three years from the date of its notification and the incentives will be available for the investment made within five years from the date of acknowledgement of application.

The third scheme, Electronics Manufacturing Clusters (EMC) 2.0, envisages creation of quality infrastructure, with minimum area of 200 acres along with industry specific facilities such as common facility centers, ready-built factory sheds, plug and play facilities among others.

As per the scheme, the government will provide financial assistance up to 50 per cent of the project cost subject to a ceiling of Rs 70 crore per 100 acres of land for setting up Electronics Manufacturing Cluster projects.

Projects will be implemented in consultation with anchor units or industries for encouraging development of supply chain and ecosystem for the electronics industry.

A total of Rs Rs 3,762.25 crore has been earmarked by the government for the scheme for a period of eight years. The scheme is expected to create around 10 lakh direct and indirect jobs, as per the statement.

"The three schemes together will enable large-scale electronics manufacturing, a domestic supply chain ecosystem of components and state-of-the-art infrastructure and common facilities for large anchor units and their supply chain partners.

"It will contribute significantly to achieving a $1 trillion digital economy and a $5 trillion GDP by 2025, it said.