MSIPS may be extended till 2020, include more electronic items

Benefits of a key scheme meant to boost electronic manufacturing in the country are likely to be extended for 5 more years and include almost the entire gamut of the segment for grant of incentives to meet the government target of net zero import by 2020.
Ministry of Communications and IT has drafted a Cabinet note for approval of amendments in Modified Special Incentive Package Scheme (MSIPS) to extend its applicability expiring in July 2015 to 2020, initially, said a source.
Only those firms will get the benefits which apply for investment under the scheme by July 2015.
"The MSIPS policy at present has many limitations. Cabinet note has been prepared keeping government's target of net zero import of electronics by 2020 and accordingly scope to extend benefit under MSIPS have been proposed," an official source said.

The MSIPS scheme, first approved in 2012, provided for reimbursement of central taxes and duties for select, very high technology and capital intensive products like electronics chip manufacturing.
For other electronic manufacturing projects, the scheme provides subsidy of 20 per cent on capital investment made in special economic zone and 25 per cent in Non-SEZ areas.

The proposal now is to include LED, solar cells, smart cards, nano-electronic components and many more for reimbursement of central taxes, the source said.
It also proposes to include consumer appliances like fully automatic washing machines, air conditioners, microwaves, refrigerators, multi-functional electronic devices, Internet of Things products, capital equipment for electronic manufacturing for 20-25 per cent subsidy scheme.

Besides extending this period, government is mulling to reduce minimum investment limit by up to 90 per cent.
The maximum reduction of threshold investment is proposed for companies interested in manufacturing electronic products on contract basis -- from Rs 100 crore to Rs 10 crore.
Till August 22, government had received 40 applications involving investment of nearly Rs 14,624 crore under MSIPS. Out of this, 16 projects involving investment of Rs 2,230 crore have been approved.
Government estimates that by 2020, Indian electronics market will be around USD 400 billion (about Rs 24 lakh crore) and in the absence of corrective measures to boost electronics manufacturing the imports will be around USD 300 billion (about Rs 18 lakh crore) by the same year.