With many companies thinking of moving their production units out of China due to the ongoing pandemic or US-China trade war, India’s 2019 National Electronics Policy may act as a catalyst in boosting domestic electronics manufacturing at a time when it is already picking up pace. Let us understand how this policy works and what it has in its bag for electronics manufacturers.
Crux of the Matter
Amidst US-China trade war and the ongoing Covid-19 pandemic, electronics manufacturing companies like Taiwan’s Foxconn are shifting their production units out of China. India’s National Electronics Policy 2019 (NEP) also comes into effect at an opportune time. Under NEP companies are offered various kinds of direct and indirect incentives to set up manufacturing units in India. The aim of NEP is to boost India’s mobile and electronics manufacturing capacity as the Electronics System Design and Manufacturing (ESDM) sector provides a foundation for “Digital India” and “Make in India” initiatives.
National Electronic Policy
Since the ESDM sector in India was facing several problems, in 2012, the government had launched NEP to lay a foundation to expand the ESDM sector in the coming years. However, after the successful completion of NEP, 2012, the BJP government launched a NEP in 2019 with modifications. NPE 2019 has 3 schemes namely Production Linked Incentive Scheme (PLI), Scheme for Promotion of Manufacturing of Components and Semiconductors (SPECS), and Electronics Manufacturing Cluster Scheme (EMC 2.0) to overcome the bottlenecks of the ESDM sector.
The 5-year target of the government from the NEP, 2019 is to create a production value of ₹8 lakh crores, exports of ₹5.8 lakh crores, and 10 lakh employment opportunities.
What Is PLI?
Production Linked Incentive is an incentive scheme related to the quantity of mobile phones manufactured in India. Eligible companies will get a 4-6% incentive on incremental sales, i.e. sales higher than in the fixed based year (here FY 19-20). This scheme could be availed for a period of 5 years. The government is indirectly also aiming to bring investment in Research & Development, Transfer of Technology, and hi-tech equipment through the criteria set in this scheme.
What Is SPECS?
Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) aims to ramp up downstream services like the production of electronic components, semiconductor, display fabrication units, Assembly, Testing, Marking and Packaging (ATMP) units, specialized sub-assemblies, and capital goods for manufacture of aforesaid goods. Financial assistance of 25% will be provided to companies’ spending on plant, machinery, equipment, technology, and Research & Development for the mentioned products.
What Is EMC 2.0?
Electronic Manufacturing Clusters 2.0 was launched to remove one of the bottlenecks of ESDM of domestic supply chain and logistics. It aims to develop a robust infrastructure to aid electronics manufacturers and Common Facility Centres (CFC) and amenities, including Ready Built Factory (RBF) sheds, plug and play facilities for attracting major global electronics manufacturers along with their supply chain to set up units in India. As the name suggests, it eventually aims to set up electronic manufacturing clusters. Under this scheme, financial assistance of a maximum of 50% of the project cost, subject to a ceiling of ₹70 crores for every 100 acres will be given to developing EMCs. Moreover, to develop CFC, financial assistance of a maximum of 75% of the project cost, subject to a ceiling of ₹75 crores will be given.
- Gordon Moore is an American businessman, engineer, and the co-founder of Intel Corporation. He is the author of Moore’s law that is an observation that the number of transistors in dense integrated circuit doubles about every two years but the cost halves.
- In line with the Make in India, individual states too launched their own local initiatives, such as “Make in Odisha”, “Tamil Nadu Global Investors Meet”, “Vibrant Gujarat”, “Happening Haryana”, and “Magnetic Maharashtra”.
- The National e-Governance Plan (NeGP) is an initiative of the Government of India to make all government services available to the citizens of India via electronic media. NeGP was formulated by the Department of Electronics and Information Technology and Department of Administrative Reforms and Public Grievances.