The Indian government has recently announced several schemes worth a total of approximately Rs 48,000 crore, aimed at propelling the nation’s electronics manufacturing sector. These initiatives are projected to attract Rs 1 lakh crore investment in the industry, bolster local electronics manufacturing, generate potential manufacturing revenue of Rs 10 lakh crore by 2025, and create 20 lakh direct and indirect jobs by the same year.
Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing
The PLI is principally designed to boost domestic manufacturing and draw substantial investments in the electronics value chain, spanning electronic components and semiconductor packaging. It offers electronics manufacturing firms an incentive of between four to six percent on incremental sales of goods produced in India and falling under target segments.
This scheme, which stretches over the next five years, is solely applicable for target areas, namely mobile phones and specific electronic components. With the introduction of the PLI, the government predicts that the domestic value addition for mobile phones will ascend to 35-40% by 2025 from the current standing of 20-25%. Correspondingly, it is expected to produce an extra eight lakh jobs, both direct and indirect.
Moreover, the country’s production of mobile phones has seen a whopping eight-fold increase in the last four years, jumping from around Rs 18,900 crore in 2014-15 to Rs 1.7 lakh crore in 2018-19.
Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)
The SPECS involves a financial incentive of 25% of capital expenditure approved by the Union Cabinet for the manufacturing of goods forming part of an electronic product’s supply chain. Allocated a budget of Rs 3,285 crore disseminated over eight years, this scheme encourages the manufacturing of electronic components and semiconductors.
The government foresees that through the SPECS, approximately six lakh direct and indirect job opportunities will be generated in the electronics manufacturing sector.
Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme
The EMC 2.0 scheme is characterized by a total incentive outlay of Rs 3,762.25 crore disseminated over an eight-year period, with the overarching aim to generate 10 lakh direct and indirect jobs under this initiative. Financial assistance up to 50% of the project cost, subject to a limit of Rs 70 crore per 100 acres of land, will be awarded for the configuration of electronics manufacturing cluster projects.
The clusters to be established will span an area of 200 acres across India and 100 acres in the country’s North East region, under the EMC 2.0 scheme.
While these government-backed incentive programs spotlight a clear path towards sustainable growth and development in India’s electronics manufacturing landscape, the long-term effectiveness of these initiatives remains to be seen. However, through these efforts, the Indian government hopes to transform the nation into an electronics manufacturing powerhouse by 2025.