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India to become electronic manufacturing hub, Cabinet approves scheme

With the aim to boost domestic manufacturing along with attracting investment in electronic component manufacturing, the Union Cabinet today has approved three schemes. Chaired by Prime Minister Narendra Modi, the cabinet has approved the Production Incentive Scheme (PLI) for Large Scale Electronics Manufacturing, financial assistance to the Modified Electronics Manufacturing Clusters (EMC2.0), and financial incentive of 25 per cent of capital expenditure for the manufacturing of goods.

The Production Incentive Scheme (PLI) for Large Scale Electronics Manufacturing proposes production linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components including Assembly, Testing, Marking and Packaging (ATMP) units. The total cost of the proposed scheme is approximately Rs 40,995 crore, which includes an incentive outlay of approximately Rs 40,951 crore and administrative expenses to the tune of Rs 44 crore.

As electronic components are the basic building blocks for electronics manufacturing, the industry has been heavily relying on China. According to the Electronic Industries Association of India (ELCINA), the electronic components market in India has increased from Rs 68,342 crore in 2015-16 to Rs 1,31,832 crore in 2018-19. Domestic production of electronic components is valued at approximately Rs 63, 380 crore, of which around Rs 48,803 crore is domestically consumed.

Kamal Nandi, President-CEAMA & Business Head & EVP Godrej Appliances says, “We welcome the array of schemes introduced by the Union Cabinet. In this difficult time where the industry is going through a tough phase, the steps taken by the government will help to boost domestic manufacturing and attract large investments in the electronics value chain. We are hopeful that the proposed schemes will aid in creating more job opportunities. This will also put an upward thrust on the economy by bringing in large scale electronics manufacturing to India. CEAMA is committed to promoting indigenous manufacturing of appliances and consumer electronics in the country. The announcement of the Production Incentive Scheme (PLI) for Large Scale Electronics Manufacturing, will assist in the necessary boost to the ‘Make in India’ initiative and support India into becoming an electronics manufacturing hub.”

“FICCI welcomes the Cabinet Approval of new scheme for electronics component manufacturing & semiconductors & also Production Linked Incentives. This will help in deepening the supply chain in the country & provide more opportunities for employment”, tweeted FICCI by tagging Manish Sharma, Executive Officer, Panasonic Corp. President & CEO, Panasonic India & SA, and Ministry of Electronics and Information Technology.

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

This is likely to benefit 5-6 major global players and few domestic champions, in the field of mobile manufacturing and Specified Electronics Components and bring in large scale electronics manufacturing in India.

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