Electronics manufacturing gets a Rs 6,000-crore push

New scheme to provide financial incentives to private companies for setting up electronics manufacturing units

As the country vies for self reliance in electronic goods production, the Department of Electronics and Information Technology (DeitY) has so far approved proposals amounting to around Rs 6,155 crore under the Modified Special Incentive Package Scheme (M-SIPS).

The scheme looks at providing financial incentives to private companies for setting up electronics manufacturing units. The government has given final as well as in-principle approval to 28 electronics manufacturing clusters (EMCs) and common facility centres (CFCs) across the country.

EXPECTATIONS GALORE

• Rs 6,155 cr approved by DeitY under the Modified Special Incentive Package Scheme (M-SIPS)
• 28 EMCs & CFCs approved by govt
• $400 billion is the expected demand growth of electronics hardware in India by 2020
• $104 billion is the estimated rise in domestic production by 2020

According to a report by Deloitte Touche Tohmatsu released last year, the demand for electronics hardware in India is projected to grow $400 billion by 2020. However, by that time the estimated domestic production could rise to only $104 billion, while the rest has to be met through imports. The government in India, through various initiatives, is looking at reducing the dependence on electronic imports by promoting domestic manufacturing.

"Here the idea is to push more companies setup base in India to manufacture LED televisions, set-top boxes, automotive electronics, telecom equipment, RFID tags and labels among other things. Most of the equipment till now are not made in India but merely assembled. We hope that this would give a much needed push to the sector," said a senior official in the Ministry of Communications and Information Technology.

"The ministry is attaching high priority to electronics and IT hardware manufacturing. It has the potential to generate domestic wealth and employment, apart from enabling cyber-secure ecosystem," added the official.

While the government has taken a number of steps to increase electronics hardware manufacturing in India including 100 per cent FDI under automatic route, no requirement for industrial licence, payment of technical know-how fee and royalty for technology transfer under automatic route, the impact of such measures has not been substantial.

"It is partly because is India is a signatory to the Information Technology Agreement (ITA-1) that has resulted in zero duty regime on import of the goods covered under the agreement. India also has free trade agreements (FTAs) with several countries and trading blocks, which has enabled zero import duty of imports not covered FTA," said the official. Besides, lack of reliable power, high cost of finance, poor logistics and infrastructure, weak components manufacturing base are other factors hampering growth of electronics in the country.

According to government officials, DeitY under the M-SIPS programme received proposals from 14 states including Goa, Gujarat, Haryana, Kerala, Madhya Pradesh, Telangana and Uttar Pradesh among others.

The proposals received include manufacturing of RFID inlays and tags, automotive electronics, telecom equipment, instrument clusters, optical fibre cable, LED televisions, wifi dongles among other things.

"Till date under the EMC scheme, DeitY has received 44 applications for setting up 40 greenfield EMCs and four CFCs in brownfield clusters over an area of 6,922 acres spanning across 18 states with a project outlay of Rs 8,313 crore, seeking grant assistance of Rs 3,508 crore," said the official.

DeitY has accorded final approval to seven greenfield EMCs, one CFC in brownfield cluster. Also, it has given in-principle approval to 17 greenfield EMCs and three CFCs in brownfield clusters.

The states which have been given final approval are Madhya Pradesh, Rajasthan, Jharkhand, West Bengal, Karnataka and Maharashtra.