Schemes for Electronics Manufacturing

Schemes for Electronics Manufacturing


In order to position India as a global hub for Electronics System Design and Manufacturing (ESDM) and push further the vision of the National Policy on Electronics (NPE) 2019, three schemes namely the Production Linked Incentive Scheme (PLI), Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and Modified Electronics Manufacturing Clusters Scheme (EMC 2.0) have been notified.

Electronics manufacturing in India has grown rapidly with a CAGR of around 25% during the last 4 years, with domestic production of electronics hardware touching $70 bn in 2018-19.  The electronics manufacturing industry currently provides employment for over 20,00,000 people in India, of which mobile manufacturing alone accounts for over 6,00,000 jobs. To further facilitate large-scale manufacturing, development of a supply chain ecosystem, and building of new manufacturing clusters in the country, each scheme has been carefully constructed to incentivize the electronics manufacturing industry.


Overview






Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing

Overview

The Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing proposes a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain including mobile phones, electronic components and ATMP units. Production Linked Incentives of up to INR 40,951 crores will be awarded over a period of 5 years.


Highlights

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Incentive

Incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India

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Target Segments

Mobile Phones and Specified Electronic Components

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Eligibility

Eligibility shall be subject to thresholds of incremental investment and incremental sales of manufactured goods

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Tenure of the Scheme

Five years subsequent to the base year as defined (FY 19-20)



Target Segments Eligible under PLI Scheme

  • Mobile Phones
  • Specified Electronic Components
    • SMT components
    • Discrete semiconductor devices including transistors, diodes, thyristors, etc.
    • Passive components including resistors, capacitors, etc. for electronic applications
    • Printed Circuit Boards (PCB), PCB laminates, prepregs, photopolymer films, PCB printing inks
    • Sensors, transducers, actuators, crystals for electronic applications
    • System in Package (SIP)
    • Micro / Nano-electronic components such as Micro Electromechanical Systems (MEMS) and Nano Electromechanical Systems (NEMS)
    • Assembly, Testing, Marking and Packaging (ATMP) units

Eligibility

Segment Proposed Incentive Rate Incremental Investment over Base Year Incremental Sales of Manufactured Goods over Base Year
Mobile Phones (Invoice value of INR 15,000 and above) * Year 1: 6%
Year 2: 6%
Year 3: 5%
Year 4: 5%
Year 5: 4%
INR 1,000 Crore over 4
Years Cumulative Minimum (Crore):
Year 1:
250
Year 2:
500
Year 3:
750
Year 4:
1,000
Year 1: INR 4,000 Crore
Year 2:
INR 8,000 Crore
Year 3:
INR 15,000 Crore
Year 4:
INR 20,000 Crore
Year 5:
INR 25,000 Crore
Mobile Phones (Domestic Companies) ** INR 200 Crore over 4
Years Cumulative Minimum (Crore):
Year 1:
50
Year 2:
100
Year 3:
150
Year 4:
200
Year 1: INR 500 Crore
Year 2:
INR 1,000 Crore
Year 3:
INR 2,000 Crore
Year 4:
INR 3,500 Crore
Year 5:
INR 5,000 Crore
Specified Electronic Components INR 100 Crore over 4
Years Cumulative Minimum (Crore):
Year 1:
25
Year 2:
50
Year 3:
75
Year 4:
100
Year 1: INR 100 Crore
Year 2:
INR 200 Crore
Year 3:
INR 300 Crore
Year 4:
INR 450 Crore
Year 5:
INR 600 Crore

*For eligibility all Incremental Sales of Manufactured Goods (covered under target segments) irrespective of Invoice Value shall be considered.

**Domestic Companies shall be defined as those which are owned by resident Indian citizens as defined in the FDI Policy Circular of 2017. A company is considered as ‘Owned’ by resident Indian citizens if more than 50% of the capital in it is beneficially owned by resident Indian citizens and/or Indian companies, which are ultimately owned and controlled by resident Indian citizens.

Process Flow

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Step One

Application Process

  1. Submission of Application – Applicant
  2. Prima Facie Examination – Project Management Agency (PMA)
  3. Letter of Acknowledgement issued – PMA
    • Letter of Acknowledgement to be issued within 15 working days post completion of examination
  4. Application Appraisal – PMA
  5. Application Approval (based on decision of Empowered Committee and Competent Authority) – PMA
    • Letter of Approval to be issued within 5 working days of approval from Competent Authority
process

Step Two

Baseline Determination Process

  1. Submission of Documents to PMA – Applicant
  2. Determination of Baseline (within 30 working days from submission) – PMA
process

Step Three

Disbursement Process

  1. Submission of Claim for Disbursement of Incentive – Applicant
  2. Verification of Eligibility and Assessment of Incentive – PMA
  3. Approval of Disbursement Claim (based on decision of Empowered Committee and Competent Authority) – PMA
  4. Disbursement of Funds – PMA




Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)

Overview

India has the potential to become a global hub for components manufacturing due to availability of cost-effective skilled manpower, fast improving infrastructure and the Government’s push for Ease of Doing Business in the country. The size of Indian electronic components market has increased at a CAGR of 32% to $20.8 bn in 2018-19. Moreover, the market opportunity for electronic components in India is expected to be around $200 bn by 2025.

The Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) aims to strengthen the manufacturing ecosystem for electronic components and semiconductors. Target manufacturing of electronic components and semiconductors through the scheme will help meet domestic demand, increase value addition and promote employment opportunities in this sector.

Incentives of up to INR 3,285 crore will be awarded under the Scheme over a period of 8 years.


Highlights

Incentive

Incentive of 25% on Capital Expenditure pertaining to plant, machinery, equipment, associated utilities and technology, including Research & Development on reimbursement basis

Target Segments

Electronic Components, Semiconductors, Specialized Sub-Assemblies and Capital Goods for these items

Eligibility

Applicable to Investments in New Units as well as Expansion of Existing Units

Tenure of the Scheme

SPECS will be open for applications for 3 years. Investments made within 5 years from the date of acknowledgement will be eligible for receiving incentive

Process Flow

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Step One

Application Process

  1. Submission of Application – Applicant
  2. Prima Facie Examination – Project Management Agency (PMA)
  3. Letter of Acknowledgement issued – PMA
    • Letter of Acknowledgement to be issued within 15 working days post completion of examination
  4. Application Appraisal – PMA
    • Appraisal Report (AR) to be prepared within 30 working days of submission of application
  5. Application Approval – PMA (based on decision of Executive Committee)
    • Letter of Approval to be issued within 5 working days of EC meeting
process

Step Two

Disbursement Process

  1. Submission of Claim for Disbursement of Incentive – Applicant
  2. Verification of Claims and Application for Incentives – PMA
    • Verification Report to be issued by the PMA within 15 working days from the date of submission of claim
    • Communication to applicant regarding approval to be sent within 15 working days of issuing Verification Report
  3. Disbursement of Funds – PMA
    • Sanction Letter to be issued and Claim to be processed with 10 working days of receiving documents
    • Disbursement of Funds within 5 working days of all formalities




Modified Electronics Manufacturing Clusters Scheme (EMC 2.0)

Overview

The Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme seeks to strengthen the infrastructure base for the electronics industry and deepen the electronics value chain in India. The development of industry-specific facilities like Common Facility Centers, Ready Built Factory, Sheds/Plug and Play facilities will not only strengthen supply chain responsiveness and promote the consolidation of suppliers but also decrease time-to-market and lower logistics costs. EMC 2.0, therefore, provides financial incentives for creating quality infrastructure as well as common facilities and amenities for electronics manufacturers. Financial Incentives of up to INR 3,762 Crore will be disbursed over a period of 8 years.  


Highlights

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Incentive

Financial incentives of up to 50% of project cost will be awarded, subject to a ceiling of INR 70 crore for every 100 acres of land

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Project Implementing Agency (PIA)

Applications under the scheme can be made by State Governments, State Implementing Agencies, Central Public Sector Units (CPSU), State Public Sector Units (SPSU), Industrial Corridor Development Corporation (ICDC), etc.

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Anchor Units

Electronics Manufacturing companies with a commitment to purchase/lease a minimum of 20% of the land area and invest a minimum of INR 300 crore

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Tenure of the Scheme

EMC 2.0 will be open for applications for 3 years. A further period of 5 years will be available for disbursement of funds




Eligibility

  • Requirement of Anchor Units
    • Purchase/lease at-least 20% of the land area
    • A minimum investment commitment of INR 300 crore (INR 150 Crore for North-Eastern States, Hill States, UTs)
  • EMC Projects
    • Financial incentives of up to 50% of project cost will be awarded, subject to a ceiling of INR 70 crore for every 100 acres of land
    • New Projects:
      • Minimum Land Area: 200 acres (100 acres for North-Eastern States, Hill States, UTs)
      • Overall ceiling: INR 350 crore per project
  • Expansion-Related Projects
    • Minimum Land Area: 100 acres adjoining (50 acres adjoining for North-Eastern States, Hill States, UTs)
    • 80% of saleable/leasable land should be allotted to ESDM units
    • At least 50% of land allotted should have started production activity
  • Common Facility Centres (CFC)
    • 75% of the project cost will be awarded, subject to a ceiling of INR 75 crore
    • 5 electronics manufacturing units identified as users