Cabinet approves production-linked incentive scheme for large-scale electronics manufacturing

The Union Cabinet has approved a Production Incentive Scheme (PLI) for large-scale electronics manufacturing entity.

An official release said on Saturday that the scheme 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 scheme provides an incentive of 4 per cent to 6 per cent on incremental sales (over the base year) of goods manufactured in India and covered under target segments to eligible companies for a period of five years.

The release said the proposed scheme is likely to benefit five-six "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.

The cost of the proposed scheme is about Rs 40,995 crore which includes an incentive outlay of Rs 40,951 crore and administrative expenses to the tune of Rs 44 crore.

The release said that the scheme has a direct employment generation potential of over 2,00,000 jobs over five years.

Indirect employment is expected to be about three times of direct employment as per industry estimates.

Production of mobile phones in the country has gone up significantly from around Rs 18,900 crore (USD 3 billion) in 2014-15 to Rs 1,70,000 crore (USD 24 billion) in 2018-19 and the domestic demand is almost completely being met out of domestic production.

"By integrating 'Assemble in India for the world' into 'Make in India,' the country can significantly increase manufacturing output," the release said. It said electronic components were the basic building blocks for electronics manufacturing.

According to the Electronic Industries Association of India (ELCINA), electronic components market in India has increased from Rs 68,342 crore (USD 11 billion) in 2015-16 to Rs 1,31,832 crore (USD 20.8 billion) in 2018-19.

Domestic production of electronic components is valued at approximately Rs 63, 380 crore (USD 10 billion), of which around Rs 48,803 crore (USD 7.7 billion) is domestically consumed.