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Electronics Manufacturing

Target NET ZERO Imports is a striking demonstration of intent.

This pillar focuses on promoting electronics manufacturing in the country with the target of NET ZERO Imports by 2020 as a striking demonstration of intent. This ambitious goal requires coordinated action on many fronts, such as:

  1. Taxation, incentives
  2. Economies of scale, eliminating cost disadvantages
  3. Focus areas – Big Ticket Items
    • FABS, Fab-less design, Set top boxes, VSATs, Mobiles, Consumer & Medical Electronics, Smart Energy meters, Smart cards, micro-ATMs
  4. Incubators, clusters
  5. Skill development, Enhancing PhDs
  6. Government procurement
  7. Safety Standards – Compulsory registration, Support for Labs and MSMEs
  8. National Award, Marketing, Brand Building
  9. National Centres – Flexible Electronics, Security Forces
  10. R & D in electronics

There are many ongoing programs which will be fine-tuned. Existing structures are inadequate to handle this goal and need strengthening.

Demand for electronic goods is increasing with a Compound Annual Growth Rate (CAGR) of 22% and is expected to touch 400 Billion USD by 2020. Indian government is also taking several steps to promote manufacturing and investment in this sector, which puts India high on the list of potential places to invest.

Demand

National Policy on Electronics (NPE)

Government of India has approved National Policy on Electronics launched in 2012 (NPE 12) which is holistic, investor friendly and market driven towards creating a conducive environment to attract global and domestic companies to invest towards the growing Electronics System Design & Manufacturing (ESDM) sector in India. This gives unique opportunity for companies to consider India as a destination in ESDM sector and be part of the next largest Electronic Manufacturing Hub of the world and also provide value added manufacturing involving medium and high technologies.

Significant progress has been made by Government of India to establish the strong foundation for the (NPE) 2012 framework. This will help for value added manufacturing involving medium and high technologies. The highlights of the policy initiative taken by Government of India include:

  1. Modified Special Incentive Package Scheme (MSIPs) subsidy of 25% of capital expenditure (20% in SEZs) is available and all excise/CVD paid on capital equipment is reimbursed.
  2. Electronic Manufacturing Clusters Scheme which provides 50% of the cost for development of infrastructure and common facilities in Greenfield clusters (undeveloped or underdeveloped area from electronic manufacturing point of view) and 75% of the cost for Brownfield clusters (area where a significant number of existing EMC exists). Land can be made readily available in several of the new Electronic Manufacturing Clusters being supported by the Government of India. Currently around 30 Electronic Manufacturing clusters are notified and GoI is targeting for 200 Electronic Manufacturing clusters by 2020.
  3. Preference to domestically manufactured goods in Government procurement. Extent of government procurement will not be less than 30%. Around 30 electronic products are already notified under this scheme. 
  4. Export of domestically manufactured Set top boxes and other electronic products are eligible for 2-5 % incentive in Focus Product Scheme under the Foreign Trade Policy.
  5. Electronic Development Funds for Research & Development and Innovation in Electronics sector is under active consideration to support start-ups in electronics and IP generation in the area of electronics.
  6. Department has accorded approval for setting up of two semiconductor wafer Fabrication (FAB) manufacturing facilities in the country.  
  7. To promote greater research in electronics and IT, Government of India will fund PhD students in Universities across the country for research in industry specific needs. 3000 PhDs will be generated through this program in the area of electronics & IT/ITES.
  8. Providing opportunities for skill development for the private sector through two Sector Skills Councils- Telecom and Electronics. Under the scheme for providing support for skill development, Government of India provides 75% to 100% of training cost for industry specific skills for skilled and semi-skilled workers.
  9. Opportunities for investment in testing laboratory infrastructure under the mandatory standards regime brought in force.
  10. Several State Governments, including Andhra Pradesh and Karnataka have already announced complementary incentives as part of their State Electronic Policies. Electronic Manufacturing Clusters have been announced by states of Madhya Pradesh, Andhra Pradesh, Punjab, and Kerala. Other states are also in process of taking similar initiatives, thereby offering a host of incentives and facilities for ESDM investors.
  11. In addition, to recognize and motivate the Micro Small and Medium Scale Enterprises (MSMEs) in the Electronic System Design & Manufacturing (ESDM) sector, the Government of India (GoI) has announced a national scheme for the sector. The Scheme aims at providing financial support to MSMEs to promote manufacturing, to build quality into Indian manufacturing & also to encourage exporters. The support under the Scheme will be provided in the form of reimbursement to the manufacturers in the MSMEs. The scheme for providing financial support as Grant in Aid is expected to benefit the manufacturers, domestic industry, exporters in the electronics sector. This will also assist to attract value added manufacturing involving medium and high technologies. The Scheme will provide GIA for the following activities:
    1. Reimbursement of expenses relating to compliance of electronic goods with “Indian Standards” notified by DeitY. The total GIA for one model is limited to `1 Lakh, only for 200 models (maximum).
    2. Reimbursement of expenses for testing and certification required for export. The total GIA under the Scheme for one model is `1.25 Lac , 800 models (maximum).
    3. Development of Electronic Manufacturing Clusters by MSMEs for diagnostic study, soft intervention and for preparing Detailed Project Reports, etc. The Total GIA available under this Section of the Scheme for Development of Clusters of `10 Lac /Cluster (max) would be available for setting up of 20 Clusters.

All these incentives are available for electronics design and manufacturing unit. This is also available for relocation of manufacturing plant from foreign country. Some of the sector  includes Semiconductor FAB, Telecom products, LED FAB and products, automotive electronics, Semiconductor ATMPs, Consumer Electronics and Appliances, Hand-held devices including Smartphone and Tablets, Strategic Electronics, EMC, Avionics and Medical Electronics etc. The product based R&D expenditure has also been included under MSIPS.

The details of these policies can be referred at department’s Website: www.deity.gov.in/esdm.

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