25% Capital Subsidy Under PLI Scheme for Electronic Components

Introduction

The Government of India’s PLI Scheme for Electronic Components is a powerful initiative to boost domestic manufacturing, reduce imports, and promote Atmanirbhar Bharat. It offers financial incentives to businesses for investing in electronic component production and infrastructure.

This article covers the objectives, benefits, eligibility, and process of the scheme in a simplified manner.

Objectives of the Scheme

• Promote manufacturing of electronic components in India
• Attract investments in high-tech sectors
• Reduce import dependency in key components
• Create job opportunities
• Increase India’s share in global electronics exports

Budget and Financial Scope

• Total financial outlay under the scheme is Rs. 22,919 crore
• Government aims to develop a strong and self-reliant electronics ecosystem

Target Segments Covered Under the Scheme

The scheme supports manufacturing of:

• Sub-assemblies like display modules and camera modules
• Core components like passive parts, PCBs, and Li-ion cells
• Advanced components like SMD and flexible PCBs
• Equipment used for production and automation

Tenure of the Scheme

• Application window for core segments (A, B, C): From 1st May 2025 for 3 months
• Application for Capital Equipment segment (D): Open for 2 years
• Base year for evaluation: FY 2024–25

Incentive Types

• Turnover-based incentive for Segments A & B: 1% to 10% on incremental sales
• Capex-based incentive for Segment D: 25% on eligible capital investments
• Hybrid incentive (Turnover + Capex) for Segment C

Minimum Investment and Turnover Requirement

• Semiconductor units: Rs. 100 to 150 crore investment with Rs. 150 crore turnover
• Passive components: Rs. 50 crore investment with Rs. 75 crore turnover
• Electromechanical components: Rs. 25 crore investment with Rs. 50 crore turnover
• Other units: Rs. 20 crore investment with Rs. 40 crore turnover

Documents Required for Application

• Certificate of Incorporation
• PAN, GST, and UDYAM registration
• KYC documents of directors/partners
• Audited financial statements
• Detailed Project Report (DPR)
• Net worth certificate from a Chartered Accountant
• Cancelled cheque with bank details

Claim Process After Approval

• Submit yearly claim form through official portal
• Upload production and sales data certified by a CA
• Incentive is disbursed directly to the registered bank account

Key Benefits for Business Units

• Direct monetary incentive on production or capital investment
• Long-term support for technological upgrade
• Special focus on startups and MSMEs
• Additional incentives for employment generation

Expert Tips  

• Prepare a complete and accurate DPR
• Ensure your UDYAM and IEC registrations are valid
• Understand eligibility before applying
• Apply within the official time window to avoid rejections

Detailed overview of PLI Scheme for Electronic Components

Welcome to a detailed overview of the Production-Linked Incentive (PLI) Scheme for Electronic Components, meticulously prepared by CA Piyush Mittal. This initiative aims to bolster domestic production, reduce import dependency, and promote an Atmanirbhar Bharat (Self-Reliant India) in the electronic components sector. Let’s explore the scheme’s objectives, incentives, and processes that stakeholders in the electronic components business should know.

Introduction to PLI Scheme

The PLI scheme is designed to stimulate the domestic manufacturing ecosystem in India’s electronics sector. By offering incentives tied to turnover, capital expenditure, and a hybrid model, the scheme aims to attract significant investment and drive substantial growth in local production. This, in turn, is expected to reduce reliance on imports and propel India towards self-reliance in electronics manufacturing.

Objective and Budget Outlay

The primary objective of the PLI scheme is to create a thriving ecosystem for electronic components manufacturing within India. This involves not only increasing production volume but also enhancing the domestic value addition in manufactured goods and promoting exports to capture a larger share of the global market. A significant budget outlay of ₹22,919 Crore underscores the government’s commitment to achieving these goals.

Target Segments Under the Scheme

Sub-assemblies

• Display Modules
• Camera Modules

Components

• Passive Components
• PCBs (Printed Circuit Boards)
• Li-ion Cells

Advanced Technologies

• HDI (High-Density Interconnect)
• SMD (Surface Mount Devices)

Capital Equipment

• Equipment used in the manufacturing of electronic components.

The PLI scheme targets a broad spectrum of electronic components and sub-assemblies to foster comprehensive growth across the electronics manufacturing value chain. This includes essential components like passive devices, PCBs, and Li-ion cells, as well as advanced technologies such as HDI and SMD. It also extends to capital equipment necessary for manufacturing these components, ensuring a holistic approach to development.

Scheme Tenure and Operational Timeline

Understanding the scheme’s tenure and operational timeline is crucial for stakeholders planning to participate. Segments A, B, and C have a limited application window, emphasizing the need for timely preparation and submission. The longer duration for Segment D reflects the government’s commitment to supporting investments in capital equipment, while FY 2024–25 serves as the benchmark for assessing performance and disbursing incentives.

Types of Incentives Offered

The PLI scheme offers a flexible incentive structure tailored to the specific needs of different segments within the electronic components industry. Turnover-linked incentives reward manufacturers for increasing their production volume, while capex-based incentives encourage investments in infrastructure and equipment. The hybrid model combines the best of both worlds, providing a balanced approach to supporting growth and innovation.

Quantum of Incentives Available

1-10%

Turnover

Incentives ranging from 1% to 10% are offered based on the incremental turnover achieved by eligible manufacturers.

25%

Capex

A fixed incentive of 25% is provided on eligible capital expenditure, encouraging investments in manufacturing infrastructure.

The quantum of incentives available under the PLI scheme is designed to be substantial enough to attract significant investment and drive meaningful growth in the electronic components sector. Turnover-linked incentives, ranging from 1% to 10%, reward manufacturers for increasing their production volume, while the 25% capex incentive provides a strong impetus for investing in manufacturing infrastructure.

Documents Required for Application

Preparing the necessary documents is a critical step in the application process for the PLI scheme. This includes essential documents such as the Incorporation Certificate, PAN, GST, and UDYAM registration, as well as KYC documents to verify the identity of the applicant. Additionally, financial statements, a detailed project report, and banking information are required to assess the applicant’s eligibility and project viability.

Claim Process for Incentives

The claim process for receiving incentives under the PLI scheme involves three key steps. First, manufacturers must submit an annual claim form with accurate production and financial data. This data must then be verified by a Chartered Accountant, who will provide a certified report. Finally, upon successful verification, the incentive amount will be directly transferred to the manufacturer’s designated bank account, ensuring a transparent and efficient disbursement process.

Key Benefits of Participating

Participating in the PLI scheme offers numerous benefits to electronic components manufacturers. These include annual financial incentives based on production performance, bonus incentives for adopting advanced technologies and making substantial investments, and priority consideration for initiatives that generate employment opportunities. These benefits collectively contribute to enhanced competitiveness, increased profitability, and sustainable growth for participating companies.

CA/Consultant Tips for Success

To maximize the chances of success in the PLI scheme application process, CA Piyush Mittal recommends that applicants focus on three key areas. First, thoroughly prepare Detailed Project Reports (DPR), CMA data, and financial projections to demonstrate the viability and potential impact of the proposed project. Second, ensure that all necessary registrations, such as UDYAM and IEC, are in place before submitting the application. Finally, carefully review the client’s eligibility criteria to ensure that they meet all the requirements of the scheme.

Minimum Investment & Turnover

Thresholds

The PLI scheme sets minimum investment and turnover thresholds to ensure that participating companies have the capacity and commitment to contribute meaningfully to the growth of the electronic components sector. These thresholds vary depending on the type of component being manufactured, with higher thresholds for semiconductors and lower thresholds for other components. Meeting these requirements is essential for eligibility and access to incentives under the scheme.

Key Takeaways and Next Steps

The PLI scheme for electronic components presents a significant opportunity for stakeholders in the industry to boost domestic production, reduce import dependency, and contribute to an Atmanirbhar Bharat. By understanding the scheme’s objectives, preparing the necessary documentation, and applying strategically, manufacturers can leverage the incentives offered to achieve sustainable growth and success in the Indian electronics market. Thank you for your attention!