Govt notifies schemes with Rs 48,000 Cr incentive to boost electronics production

The government on Wednesday notified three schemes involving total incentives of around Rs 48,000 crore to boost local electronics manufacturing and create 20 lakh direct and indirect jobs by 2025. It notified production linked incentive scheme (PLI) for large scale electronics manufacturing, the scheme for promotion of manufacturing of electronic components and semiconductors (SPECS), and the modified electronics manufacturing clusters (EMC 2.0) scheme.

It expects to attract Rs one lakh crore investment in the sector and generate manufacturing revenue potential of Rs 10 lakh crore by 2025.

"The Production Linked Incentive Scheme (PLI) for large scale electronics manufacturing proposes a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain including electronic components and semiconductor packaging," the notification said.

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Under the scheme, electronic manufacturing companies will get an incentive of four to six percent on incremental sales (over base year) of goods manufactured in India and covered under target segments, to eligible companies over a period of next five years.

"The scheme shall only be applicable for target segments namely mobile phones and specified electronic components," the notification said.

The production of mobile phones in the country has surged eight-times in the last four 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.

The SPECS notified for manufacturing of electronics components and semiconductors has a budget outlay of Rs 3,285 crore spread over a period of eight years.

The notified EMC 2.0 has a total incentive outlay of Rs 3,762.25 crore spread over a period of eight years with an objective to create 10 lakh direct and indirect jobs under the scheme.

The government estimates that PLI scheme, 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 and generate additional eight lakh jobs, both direct and indirect.

The government estimates that push for manufacturing of electronics components and electronic chips will create around six lakh direct and indirect jobs.

The EMC 2.0 scheme 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 of Electronics Manufacturing Cluster projects.

Electronic manufacturing clusters to be set up under the scheme will be spread in an area of 200 acres across India and 100 acres in North East part of the country.