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Policy Update: MeitY notifies 3 major schemes to promote electronics industry in India

Context

Recently, the Ministry of Electronics and Information Technology (MeitY) notified three major schemes to promote electronics industry in India. The Union Cabinet led by Prime Minister Narendra Modi approved these schemes on 21 March, 2020. The three schemes, namely, Production Linked Incentive (PLI) Scheme, Electronics Manufacturing Clusters (EMC) 2.0 and Scheme for Promotion of Manufacturing of Electronics Components and Semiconductors (SPECS) are aimed at boosting the electronics manufacturing in India by further expanding it and increasing domestic value addition.

Highlights of the schemes

  1. PLI Scheme

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 Scheme shall extend an incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India and covered under target segments, to eligible companies, for a period of 5 years subsequent to the base year.

The Scheme shall be implemented through a Nodal Agency. Such Nodal Agency shall act as a Project Management Agency (PMA) and be responsible for providing secretarial, managerial and implementation support and carrying out other responsibilities as assigned by MeitY from time to time.

An Empowered Committee (EC) including CEO NITI Aayog, Secretary Economic Affairs, Secretary Expenditure, Secretary MeitY, Secretary Revenue, Secretary DPIIT and DGFT will be formed.  The EC will consider applications, as found eligible by the PMA under the Scheme, for approval. The EC will conduct a periodic review of eligible companies with respect to their investments, employment generation, production and value addition under the Scheme.

Read more here.

  1. EMC 2.0

The Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme would support setting up of both Electronics Manufacturing Clusters (EMCs) and Common Facility Centers (CFCs).  For the purpose of this Scheme, an EMC would be set up in geographical areas of certain minimum extent, preferably contiguous, where the focus is on development of basic infrastructure, amenities and other common facilities for electronic system design and manufacturing (ESDM) units.

The total outlay of the propose EMC 2.0 Scheme is ₹ 3,762.25 crore over a period of 8 years.

The Scheme will create a robust infrastructure base for electronic industry to attract flow of investment in ESDM sector and lead to greater employment opportunities.

This is a continuation of an existing scheme launched by MeitY in 2017 in modified form for further strengthening the infrastructure base for electronics industry in the country and deepening the electronics value chain.

Read more here.

  1. SPECS

The Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS) proposes to offer financial incentive of 25% of capital expenditure for the manufacturing of goods listed by the Government that constitute the supply chain of an electronic product under it.

The scheme will help offset the disability for domestic manufacturing of components and semiconductors in order to strengthen the electronics manufacturing ecosystem in the country. It will be applicable to investments in new units as well as expansion of capacity/ modernization and diversification of existing units.

The scheme will be implemented through a nodal agency. The nodal agency would do the assessment of the application. Such nodal agency will act as Project Management Agency (PMA) and be responsible for providing secretarial, managerial and implementation support and carrying out other responsibilities as assigned by MeitY from time to time. The functioning and responsibilities of PMA will be elaborated in the Scheme Guidelines to be issued by MeitY separately.

PMA will put the applications that have been appraised and found eligible before the Executive Committee (EC) to be constituted by MeitY. EC will be chaired by an officer not below the rank of Joint Secretary in MeitY. EC will comprise of representatives from relevant Ministries/ Departments and organizations.

Read more here.

If you any queries/questions regarding this, please write to komal@nasscom.in.

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