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Draft electronics policy aims US$ 400 bn manufacturing ecosystem turnover by 2025

PTI:  October 11, 2018

New Delhi: The IT ministry looks to create a USD 400 billion electronics manufacturing industry by 2025 with mobile devices segment accounting for three-fourths of the production, according to the draft electronics policy.

"Promote domestic manufacturing in the entire value-chain of ESDM (electronic system design and manufacturing) for economic development to achieve a turnover of USD 400 billion by 2025," the draft National Policy on Electronics (NPE) released by the Ministry of Electronics and IT on Wednesday proposes.

The proposed policy aims to double target of mobile phone production from 500 million units in 2019 to 1 billion by 2025 to meet the objective. 

"This (USD 400 billion turnover) shall include targeted production of 1.0 Billion mobile handsets by 2025, valued at USD 190 billion (approximately Rs 13 lakh crore), including 600 Million mobile handsets valued at USD 110 Billion (approximately Rs 7 lakh crore) for export," the draft said. 

According to the draft, the government plans to end modified special incentive scheme with with schemes that it will find easier to implement such as interest subsidy and credit default guarantee etc.

Modified Special Incentive Package scheme (M-SIPS) was launched in 2012 which provided for capital subsidy of 25 per cent for Electronics Industry located in non-SEZ area and 20 per cent for those in SEZ areas. 

As on September 30, 2018, 265 applications with proposed investment of Rs 61,925 crore have been received under M-SIPS, out of which 188 applications with proposed investment of Rs 40,922 crore have been approved and the investment of Rs 8,335 crore has been made by 139 applicants, the draft said.

The current NPE in place had proposed creation of 200 electronic manufacturing clusters (EMCs) by 2020 that will house entire ecosystem for development and production of specific category of products.

According to the draft, 20 greenfield EMCs and three brownfield EMC projects have been sanctioned with the project outlay of Rs 3,898 crore, including Rs. 1,577 crore from the Government of India. 

The policy proposes to push development of core competencies in all the sub-sectors of electronics including electronic components and semiconductors, defence electronics, automotive electronics, industrial electronics, strategic Electronics etc.

The draft proposes suitable direct tax benefits, including inter-alia investment-linked deduction under Income Tax Act for electronics manufacturing sector, for setting up of a new manufacturing unit or expansion of an existing unit.

The proposal includes increasing tax benefits on expenditure incurred on research and development, enhancing rate of duty drawback for electronics sector, reimbursement of State levies and other levies for which input tax credit is not available, allowing duty free import of second-hand capital goods for electronics hardware manufacturing etc.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.