Cabinet approves schemes to boost electronics mfg with Rs 48,000 cr incentives

The Union Cabinet has cleared three schemes involving a total incentive of around Rs 48,000 crore to boost electronics manufacturing in the country, Telecom and IT Minister Ravi Shankar Prasad said on Saturday. The government is expecting to generate manufacturing revenue potential of Rs 10 lakh crore and create direct and indirect jobs for 20 lakh people by 2025 through these schemes, he said.

Besides this, the Cabinet in its meeting held on Friday also approved incentives for medical devices to reduce dependency on the import of electronic products for medical care in the country. "Two long-term policy decisions have been taken to make India a big hub of manufacturing. First in the case of electronics, second in the case of pharma and also medical devices. Cabinet has approved production linked-incentive for electronics companies. We will give Rs 40,995 crore in the coming five years for production linked-incentive," Prasad said. Under the scheme, electronic manufacturing companies will get an incentive of 4 to 6 percent on incremental sales (over a base year) of goods manufactured in India and covered under target segments, to eligible companies over a period of next 5 years.

Industry body India Cellular and Electronics Association said that the PLI scheme is of a global scale that not only spur manufacturing but more importantly exports of mobile handsets at a global scale. "The National Policy for Electronics 2019 envisions India to reach a mobile phone production of USD 190 billion by 2025, of which USD 110 billion would be exported. PLI is the policy intervention to support the ambition to build the electronics sector, where the main focus remains on the manufacturing of mobile phones and components," ICEA Chairman Pankaj Mohindroo said. The Cabinet approved scheme for promotion of manufacturing of electronics components and semiconductors with a budget outlay of Rs 3,285 crore spread over a period of 8 years. It also approved the revised version for electronics manufacturing clusters with a total incentive outlay of Rs 3,762.25 crore spread over a period of 8 years with an objective to create 10 lakh direct and indirect jobs under the scheme. "Because of these three schemes, we hope to generate manufacturing revenue potential of Rs 10 lakh crore by 2025 and generate direct and indirect jobs for 20 lakh people," Prasad said. The government estimates that the PLI scheme, domestic value addition for mobile phones is expected to rise to 35-40 percent by 2025 from the current level of 20-25 percent and generate additional 8 lakh jobs, both direct and indirect.

"This incentive is linked to production and investment in India. We also make 3-4 Indian companies also champion companies," Prasad said. The government estimates that push for manufacturing of electronics components and electronic chips with creating around 6 lakh direct and indirect jobs. "If India has to progress in the field of electronics then it should also become a centre for component manufacturing for electronics, telecommunications, consumer electronic, medical electronics, strategic electronics, etc. This is an investment in the downstream value chain. We will give 25 percent incentive on capital expenditure," Prasad said.

The EMC 2.0 scheme will provide financial assistance upto 50 percent 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 will be spread in an area of 200 acres across India and 100 acres in North-East part of the country. Whoever will make the investment of Rs 300 crore under this scheme will be given incentives," Prasad said. The minister said that the production of mobile phones in the country has gone up 8 times in the 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. "It is extremely critical to keep it (implementation of schemes) simple. Quick disbursement of money on the basis of one or at-most two parameters and ensure annual signoff with no retrospective claims on the industry on incentives disbursed," MAIT President Nitin Kunkolienker said.