The Government of India recently introduced the Electronics Component Manufacturing Scheme. This initiative aims to enhance the domestic electronics supply chain. With a funding of Rs. 22,919 crore, it strives to make India self-reliant in electronics manufacturing. The scheme is expected to attract investments and create numerous job opportunities.
Objectives of the Scheme
The primary goal of the scheme is to encourage a robust ecosystem for electronics component manufacturing. It aims to attract both domestic and global investments. The initiative also seeks to increase Domestic Value Addition (DVA) and integrate Indian firms into Global Value Chains (GVCs).
Investment and Economic Impact
The scheme anticipates attracting investments of Rs. 59,350 crore. It is projected to generate a production value of Rs. 4,56,500 crore. Additionally, it is expected to create direct employment for around 91,600 individuals, alongside many indirect job opportunities.
Incentives for Manufacturers
The scheme provides tailored incentives to Indian manufacturers. These incentives are designed to address specific challenges faced by different categories of components and sub-assemblies. The incentives include turnover-linked benefits and capital expenditure incentives.
Target Segments
The scheme covers various target segments. These include display modules, camera modules, non-Surface Mount Devices, multi-layer Printed Circuit Boards, and lithium-ion cells. Each segment has specific incentives aimed at boosting production capabilities.
Duration and Employment Linkage
The scheme is set to last for six years, with a one-year gestation period. A portion of the incentives is linked to achieving employment targets. This linkage is intended to ensure that job creation is a key focus of the initiative.
Background of Electronics Manufacturing in India
Electronics is one of the fastest-growing industries globally. It plays important role in economic and technological development. Over the past decade, India’s electronics manufacturing sector has experienced growth. Domestic production increased from Rs. 1.90 lakh crore in FY 2014-15 to Rs. 9.52 lakh crore in FY 2023-24. Exports also saw a rise from Rs. 0.38 lakh crore to Rs. 2.41 lakh crore during the same period.
Strategic Importance
The electronics sector is vital for India’s economic strategy. It not only supports various industries but also contributes to national security. By boosting domestic manufacturing, India aims to reduce reliance on imports and enhance its competitive edge in the global market.
Questions for UPSC:
- Estimate the impact of the Electronics Component Manufacturing Scheme on India’s economy and employment sector.
- Critically discuss the significance of Domestic Value Addition in the context of India’s electronics manufacturing.
- Examine the role of Global Value Chains in enhancing India’s electronics manufacturing capabilities.
- Point out the challenges faced by the Indian electronics sector and analyse the government’s initiatives to address them.
Answer Hints:
1. Estimate the impact of the Electronics Component Manufacturing Scheme on India’s economy and employment sector.
- Investment of Rs. 59,350 crore is expected to stimulate economic growth.
- Projected production value of Rs. 4,56,500 crore will enhance the GDP contribution.
- Direct employment for approximately 91,600 individuals will reduce unemployment rates.
- Indirect job creation will further boost local economies and communities.
- Overall, the scheme aims to strengthen India’s self-reliance in electronics manufacturing.
2. Critically discuss the significance of Domestic Value Addition in the context of India’s electronics manufacturing.
- Domestic Value Addition (DVA) enhances local manufacturing capabilities and reduces import dependency.
- It supports the development of indigenous technologies and innovation in the electronics sector.
- DVA increases competitiveness by improving product quality and reducing costs.
- It contributes to economic stability by creating jobs and encouraging local industries.
- Higher DVA can lead to improved trade balances and economic resilience.
3. Examine the role of Global Value Chains in enhancing India’s electronics manufacturing capabilities.
- Global Value Chains (GVCs) facilitate access to international markets and technologies.
- Integration into GVCs allows Indian firms to learn and adopt best practices from global players.
- GVCs enhance collaboration and partnerships, boosting innovation in manufacturing processes.
- Participation in GVCs can attract foreign investments and improve export potential.
- Strengthening GVC integration supports the overall growth of the electronics ecosystem in India.
4. Point out the challenges faced by the Indian electronics sector and analyse the government’s initiatives to address them.
- Challenges include high import dependency for raw materials and components.
- Lack of skilled workforce limits the growth and competitiveness of the sector.
- Infrastructure deficits can hinder manufacturing efficiency and scalability.
- The government’s initiatives, like the Electronics Component Manufacturing Scheme, aim to attract investment and enhance capabilities.
- Incentives provided under the scheme target specific challenges, promoting domestic production and job creation.
