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Government notifies three incentive schemes to boost electronic manufacturing

The largest among the three schemes, with an outlay of Rs 40,000 crore, will give incentives of 4-6 percent on incremental sales of electronic products.

Apr 2, 2020 18:21 IST
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The Union Ministry of Electronics and Information Technology has notified three schemes for the electronic sector to boost manufacturing. The schemes offer incentives worth more than Rs 48,000 crore.

The incentives will be applicable from August 1, 2020 and applications will initially be open for four months. The schemes were approved by the Union Cabinet in the last month. 

The three schemes include the Production Linked Incentive (PLI) scheme, Electronics Manufacturing Clusters (EMC) 2.0 and Scheme for Promotion of Manufacturing of Electronics Components and Semiconductors (SPECS).

Production Linked Incentive (PLI) scheme

The largest among the three schemes, with an outlay of Rs 40,000 crore, will give incentives of 4-6 percent on incremental sales of electronic products including mobiles and electronic components such as photopolymer film, Printed Circuit Boards and Assembly, Testing, Marking and Packaging units. 

Key Requirements

Under the scheme, the companies that sell mobile phones for Rs 15000 or more and which make a cumulative investment of Rs 1,000 crore over four years, starting with Rs 250 crore in the first year, will qualify for an incentive of 6 percent for the first two years, followed by 5 percent for the next two and 4 percent in the fifth year.

The incremental sale of manufactured goods over the base year should be Rs 4,000 crore for these companies in the first year, with sales totaling to about Rs 25,000 crore by the fifth year. 

For domestic mobile phone companies, the investment threshold is Rs 200 crore over four years and sales criteria is Rs 5,000 crore in five years. 

For components, the investment threshold is Rs 100 crore for 4 years and Rs 600 crore of sales in 5 years. 

The incentives under the scheme will be applicable from August 1 and applications will initially be open for four months.

The two other notified schemes include:

1. Electronics Manufacturing Clusters (EMC) 2.0

2. Scheme for Promotion of Manufacturing of Electronics Components and Semiconductors (SPECS).

Significance

The three schemes together with an outlay of Rs 48,042.25 crore is expected to lead to an investment worth Rs 20 lakh crore and create employment opportunities for almost 25 lakh people in the next 5-6 years. These schemes are expected to play a huge role in realising India's goal of achieving $1 trillion digital economy by 2025.

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