Government Seeks to Boost Electronics Manufacturing

As part of Prime Minister Narendra Modi's Make in India and Digital India initiatives, the government approved a proposal for extending for five years the capital subsidy provided to electronic manufacturing units, officials said in New Delhi on Wednesday.

A senior official said the scheme, extended for five years beyond July 25, 2015, has also been expanded to cover 15 new product categories not covered earlier.

The official said the cabinet approved the expansion and extension of Modified Special Incentive Package Scheme (MSIPS).

The scheme was first approved by the government in July 2012 and provides capital subsidy of 20 percent in Special Economic Zone (25 percent in non-SEZs) for units engaged in electronics manufacturing. The scheme was initially approved for a period of three years.

The official, not willing to be named, said that the demand for electronics in India is expected to reach $400 billion (roughly Rs. 25,48,367 crores) by 2020 but manufacturing has been negligible.

He said import of electronics is expected to exceed import of oil by 2020 and the government had set an ambitious goal of 'net zero import' of electronics under the Digital India programme.

The official said the electronics sector had the potential to attract investments of $100 billion (roughly Rs. 6,37,089 crores) and provide employment to 28 million people.

He said the benefits of the scheme will now be available in new product categories including smart cards, liquid crystal modules, consumer appliances such as machines, electronic product design, Internet of things (IoT) products, motors, optic fibres, raw materials for electronic products, capital equipment for electronics manufacturing, fabrication of semiconductor chips and re-manufacturing of electronic products.

The official said the government also made it easier to receive benefits under the scheme.

These include allowing the incentives from the date of submission of application, disbursement of incentives on a quarterly basis and allowing the scheme in any part of the country as against only in notified areas.