Electronics Component Manufacturing Scheme

Scheme has specified the Target Segments as under:

Turnover linked incentive shall mean incentive as a percentage of incremental turnover/sales over base year as per rate of incentive given as under:

*We must make capex in Plant & Machinery for manufacturing the target segmented products of Rs. 50 crores staggered over a period of five years as aforesaid table. However, there is no capex incentive for product covered under B.3. Non-Surface mount devices (non-SMD) passive components for electronic applications (illustrative list at Annexure A(I)).

** In case, an applicant meets incremental sales threshold and cumulative incremental investment threshold and is unable to meet cumulative incremental employment threshold, the turnover linked incentive shall be given by deducting equivalent to 1% of the turnover from the specified rate.

Base Year:

Financial Year (FY) 2024-25 shall be treated as the base year for the computation of turnover linked incentive under the scheme. The applicant may opt for a gestation period of one year and, in such cases, base year would be FY 2025-26.

MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY
(IPHW Division)
NOTIFICATION

New Delhi, the 8th April, 2025

Subject: Electronics Component Manufacturing Scheme

I. BACKGROUND

1.1 F. No. W/49/2024-IPHW.—Electronics is one of the highest-traded and fastest-growing industries globally due to ongoing digitization. As digitization continues to advance, the electronics industry is expected to play a pivotal role in shaping the global economy and advancing a country’s economic and technological development. Since electronics permeates all the sector of the economy, it has cross-cutting economic and strategic importance. Its economic importance extends beyond its direct contribution, as it is a foundational industry that influences, supports, and enables progress in other sectors.

1.2 In CY 2022, global electronics production stood at USD 4.3 trillion. Out of this, finished electronics products accounted for approximately USD 2.5 trillion, while electronics components contributed around USD 1.8 trillion. (Source: S&P Global)

1.3 Ministry of Electronics and Information Technology (MeitY) had notified Phased Manufacturing Programmer, National Policy on Electronics 2019, and Production Linked Incentives (PLI) to boost electronics manufacturing in the country. As a result of these initiatives, the domestic production of electronic goods increased five times from ₹ 1.90 lakh crore (USD 30 Billion) in FY2014-15 to ₹ 9.52 lakh crore in FY2023-24 (USD 115 Bn) (industry figures) at a Compound Annual Growth Rate (CAGR) of more than 17%.

1.4 Further, the PLI scheme for Large Scale Electronics Manufacturing (LSEM) has also catalysed growth of electronics manufacturing led by mobile phones, resulting in exponential growth in electronics export from ₹ 81,822 crore in FY 2020-21 to ₹ 2,41,157 crore in FY 2023-24 at the CAGR of more than 43%.

1.5 Due to the success of PLI scheme for LSEM, launched in April 2020, the import of finished electronics goods has more or less remained stagnant. However, the imports of electronic components required to manufacture finished electronics goods have increased corresponding to the growth in electronics production.

1.6 NITI in its report “Electronics: Powering India’s Participation in Global Value Chain (GVC)” released in July 2024 enumerates multiple challenges faced by component and sub-assembly manufacturers. These are: (i) high upfront capex requirement, (ii) high investment to turnover ratio (iii) long gestation period (iv) lack of scale; and (v) catching up with technological advancements.

1.7 Therefore, for Bharat to move up the value chain in electronics manufacturing, it is imperative to create an enabling environment for domestic manufacturing of components and sub-assemblies. Components are the heart of electronics products and constitute a significant part of the total value of the finished product. Domestic component manufacture would not only lead to significant increase in the domestic value addition but also result in savings in significant foreign exchange by reducing imports.

1.8 Hence, a policy initiative for developing and manufacturing ecosystem for focused sub-assemblies and bare components of electronics is also necessary to address the factors affecting the competitiveness of component manufacturing in Bharat.

1.9 NITI Aayog in its report has also made recommendations for a policy initiative in terms of fiscal interventions for component manufacture and reforms to help Bharat to create more employment in electronics manufacture.

1.10 Such policy interventions would enable domestic manufacturers to integrate with the supply chain partners of GVCs. This would help in achieving the desired scale and competitiveness through value addition not only meeting the domestic demand but exports as well. Further, this would also result in creation of significant employment opportunities for the youth in manufacturing space.

1.11 Accordingly, this scheme has been formulated to overcome the disabilities and other challenges being faced by the industry to achieve “Atmanirbharta in electronics supply chain ecosystem” by offering incentives for component manufacture in Bharat.

2. ELECTRONICS COMPONENT MANUFACTURING SCHEME

The scheme provides differentiated fiscal incentives in terms of (a) turnover linked incentive (b) capex incentive and (c) hybrid incentive [i.e. combination of both (a) and (b)] on target segment products, depending on the specific challenges being faced by the industry.

3. OBJECTIVE

The objective of the proposed scheme is to develop robust component manufacturing ecosystem by attracting investments (global/domestic) across the value chain, leading to increase in Domestic Value Addition (DVA) and increase in the share of Bharat’s exports in global electronic trade by integrating its domestic electronic industry with the Global Value Chains (GVCs).

4. TARGET SEGMENT

The target segments covered under the scheme shall be as follows:

5. TYPE AND QUANTUM OF INCENTIVE

The scheme provides incentive in the form of turnover linked incentive, capex incentive and hybrid incentive, defined as under:

Turnover linked incentive shall mean incentive as a percentage of incremental turnover/sales over base year as per rate of incentive given in Annexure A(II) for various target segments and products covered therein.

Capex incentive shall mean incentive on eligible capital expenditure for manufacturing of target segment goods as per rate of incentive given in Annexure A(II) for various target segments and products covered therein. An adequate mechanism would be put in place for assessment of actual capital expenditure by an applicant for Capex incentive. Furthermore, disbursement shall only be made after the commencement of commercial production.

Hybrid incentive shall mean combination of turnover linked incentive and capex incentive for manufacturing of target segment goods as per rate of incentive given in Annexure A(II) for various target segments and products covered therein.

The type of incentive offered to the target segments under the scheme are as under:

6. BASIS OF INCENTIVES

6.1 The turnover linked incentive shall be given on net incremental sales (over the base year) of target segment

goods manufactured in Bharat. For disbursement of turnover linked incentive, the incremental sales and cumulative incremental investment shall be mandatory criteria. Out of total turnover linked incentive rate as mentioned in Annexure A(II), 1% shall be disbursed only on meeting cumulative incremental employment threshold criteria as per Annexure A(III). In case, an applicant meets incremental sales threshold and cumulative incremental investment threshold and is unable to meet cumulative incremental employment threshold, the turnover linked incentive shall be given by deducting equivalent to 1% of the turnover from the specified rate at Annexure A(II).

6.2 The capex incentive shall be given on eligible capital expenditure, as per rates given in Annexure A(II),

incurred for manufacturing of target segment products in Bharat. For disbursement of capex incentive, meeting the investment threshold and commencement of commercial production shall be mandatory criteria. Out of total capex incentive rate (25%), 5% of the capex shall be disbursed only on meeting cumulative incremental employment threshold as per Annexure A(III). In case, an applicant is meeting the investment threshold and commencement of commercial production and unable to meet cumulative incremental employment threshold, the capex incentive shall be given by deducting 5% of the capex from the specified rate at Annexure A(II).

6.3 Target segment specific criteria, if any, shall be dealt in the scheme guidelines.

7. TENURE OF THE SCHEME

7.1 The turnover linked incentive under the scheme shall be provided for a period of six (6) years. There shall

also be a provision for one (1) year of gestation period on optional basis.

7.2 For target segments (A) sub-assemblies, (B) bare components and (C) selected bare components, the scheme

shall be open for applications for a period of three (3) months initially from 1^st May 2025, which may be extended. It may also be reopened for applications anytime during its tenure based on the response from the industry and budget availability.

7.3 For turnover linked incentive, the first year for the purpose of incremental sales would be counted from 1 ^st

April 2025 to 31^st March 2026. For those opting for gestation period, this would be taken as 1^st April 2026 to 31^st March 2027. Further, the cumulative incremental investment shall be counted from the date of scheme notification.

7.4 For target segments (D) Supply chain of sub-assemblies & bare components and capital equipment for

electronics manufacturing, the scheme shall be open for applications initially for a period of two (2) years from 1^st May 2025. The applications received under the scheme shall be appraised on an ongoing basis and implementation shall proceed as per the approvals accorded under the scheme. The fiscal support shall be available for investment made within 5 years from the date of acknowledgement of the application.

8. ELIGIBILITY

8.1 Greenfield as well as brownfield investment for the target segment shall be eligible under the scheme.

8.2 An applicant shall submit separate applications for each Target Segment products.

8.3 An applicant making multiple applications for the same product covered under the target segment shall not

be eligible.

8.4 The qualification of applicants shall be decided on consolidated global Electronics System Design and

Manufacturing (ESDM) revenue or manufacturing revenue/technological and financial capability and shall be detailed in the scheme guidelines.

 9. BASE YEAR

Financial Year (FY) 2024-25 shall be treated as the base year for the computation of turnover linked incentive under the scheme. The applicant may opt for a gestation period of one year and, in such cases, base year would be FY 2025-26.

10. BUDGET OUTLAY

The budget outlay of the scheme is ₹ 22,919 crore including administrative expenses. The incentive outlay for the target segments under the scheme shall be fungible among themselves based upon the fund requirement and response received under the scheme.

11. BASIS OF COMPUTATION

11.1 To avail incentives under the scheme, the applicant must meet the threshold criteria as mentioned at

Annexure A(III).

11.2 Turnover linked incentive shall be computed based on the details furnished by the applicants to the

Ministry/ Project Management Agency (PMA) with respect to cumulative incremental investment, net incremental sales of manufactured goods under the target segment and cumulative incremental employment generated.

11.3 Capex incentive shall be computed based on the details furnished by the applicants to the Ministry/

Project Management Agency (PMA) with respect to capital expenditure incurred, commencement of commercial production and cumulative incremental employment generated.

11.4 Any investment/ sale considered under any other Government of Bharat scheme for incentive shall not be

considered as eligible investment/ sale under this scheme.

11.5 The claims under the scheme for the incentive may be submitted on a quarterly basis, subject to meeting

the eligibility criteria.

12. APPROVAL AND DISBURSEMENT PROCESS

The approval and disbursement process shall be dealt in scheme guidelines.

13. GOVERNANCE MECHANISM

13.1 The scheme shall be implemented by Ministry through a nodal agency, which shall act as a Project

Management Agency (PMA). The PMA shall be responsible for receiving the applications, scrutinizing the applications, issuance of acknowledgement letter, and submitting the appraisal reports for consideration.

13.2 MeitY shall constitute an inter-ministerial Governing Council (GC) chaired by Secretary, MeitY and have

representatives from NITI Aayog, Department of Expenditure, Department of Economic Affairs, Department for Promotion of Industry and Internal Trade, Department of Telecommunication, Ministry of Heavy Industries.

13.3 GC shall review the appraisal report submitted by PMA and make recommendations to competent authority

for consideration and approval.

14. SCHEME GUIDELINES

The Scheme Guidelines for implementation of the scheme shall be issued by the Ministry of Electronics and Information Technology separately with the approval of the Hon’ble Minister of Electronics and Information Technology.

15. AMENDMENT IN SCHEME AND GUIDELINES

The scheme and its guidelines may be reviewed and amended, with respect to products covered under target segment(s), applicable incentive rates, tenure of the scheme, threshold of investment, sales & employment, gestation period, or any other matter considered necessary for effective implementation of the Scheme, from time-to-time on recommendation of GC and approval of the Hon’ble Minister of Electronics and Information Technology.

List of products covered under certain target segments

Annexure A(II)

Target segments and incentive rates

 ^#The applicant shall be eligible for an additional incentive of 1% and 2% on domestic sourcing/manufacturing of laminate for multi-layer PCB manufacturing and of Cathode Active Material (CAM) for Li-ion cell manufacturing respectively.

Annexure A(III)

Threshold criteria for target segments

*It is indicative employment per crore of investment, the actual cumulative incremental employment threshold shall be corresponding to the cumulative incremental investment.