Incentive Schemes for Manufacturing of Electronics/Electronics Components/Semiconductors
The Ministry of Electronics and Information Technology has issued notifications on 01 April 2020 to introduce two incentive schemes for companies engaged in the manufacture of electronic products.
1. Production Linked Incentive (‘PLI’) Scheme – This scheme focuses on providing incentives of 4% to 6% on incremental sales to eligible companies
2. Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (‘SPECS’) – This scheme focuses on providing incentive of 25% of capital expenditure made by eligible entities
Key features of these Schemes are summarised below:
The Production Linked Incentive (‘PLI’) scheme
Segment | Proposed Incentive Rate | Incremental Investment over base year | Incremental Sales of goods manufactured over base year |
Mobile Phones (Invoice value of INR 15,000 and above)1 | Year 1: 6%
Year 2: 6% Year 3: 5% Year 4: 5% Year 5: 4% |
INR 1,000 Cr over 4 years;
Cumulatively Min.: Year 1: INR 250 Cr Year 2: INR 500 Cr Year 3: INR 750 Cr Year 4: INR 1000 Cr |
Year 1: INR 4,000 Cr
Year 2: INR 8,000 Cr Year 3: INR 15,000 Cr Year 4: INR 20,000 Cr Year 5: INR 25,000 Cr |
Mobile Phones (Domestic Company)2 | INR 200 Cr over 4 years;
Cumulative Min.: Year 1: INR 50 Cr Year 2: INR 100 Cr Year 3: INR 150 Cr Year 4: INR 200 Cr |
Year 1: INR 500 Cr
Year 2: INR 1,000 Cr Year 3: INR 2,000 Cr Year 4: INR 3,500 Cr Year 5: INR 5,000 Cr |
|
Specified Electronic Components | INR 100 Cr over 4 years;
Cumulative Min.: Year 1: INR 25 Cr Year 2: INR 50 Cr Year 3: INR 75 Cr Year 4: INR 100 Cr |
Year 1: INR 100 Cr
Year 2: INR 200 Cr Year 3: INR 300 Cr Year 4: INR 450 Cr Year 5: INR 600 Cr |
1 For eligibility, all Incremental Sales of Manufactured Goods (covered under Target Segment) irrespective of invoice value to be considered
2 Domestic Company above-mentioned is as per the FDI Policy, 2017- Domestic company is a company owned by resident Indian citizens. A company is owned when more than 50% of capital is beneficially owned by Indian citizens or Indian companies which are ultimately owned and controlled by resident Indian citizens
Recently, the GOI has taken certain measures to provide impetus to domestic manufacturing in this sector such as:
1. Reduction in income tax rates
2. Increase of customs duty rate on components of mobile phones
3. Providing an exemption from basic customs duty on imports of notified parts/inputs used for manufacture of certain electronics
This PLI Scheme incentive will act as an impetus for growth of domestic manufacture of electronic products/ components in India. This scheme is likely to attract investments in the domestic electronic sector and enable domestic manufacturers to deal with rapid changes in technology. Therefore, it is important for the business houses to evaluate their business plan in light of the above scheme.
https://meity.gov.in/writereaddata/files/production_linked_incentive_scheme.pdf
Scheme for Promotion of Manufacturing Electronic components & Semiconductors (‘SPECS’)
To strengthen the electronics manufacturing ecosystem in the country
The SPECS Scheme will be applicable to investments in new units as well as expansion of capacity/ modernisation and diversification of existing units by any entity registered in India
Sr. No. | Description of Goods | Minimum Investment Threshold Limit (in INR) |
1. | SMT components including LED Chips | 5 Cr |
2. | Chip Modules for Smart Cards, RFID Antenna & Labels, CoB/ System in Package | |
3. | Passive components including resistors, capacitors, ferrites, etc. for electronic applications | |
4. | Electromechanical components including transformers, inductors, coils, relays, switches, micro motors, stepper motors, BLDC Motors, Connectors, Heat Sinks, Antenna, Speakers, Microphones, etc. for electronic applications | |
5. | Magnetrons, Wave guides, Circulators, Couplers, Isolators, Filters, Magnets, RF Components for electronic applications | |
6. | Printed Circuit Boards (PCBs), PCB Laminates, Prepegs, Photopolymer films, PCB Printing Inks; Printed Flexible Electronics | |
7. | Sensors, Transducers, Actuators and Crystals for electronic applications | |
8. | Camera Modules, Vibrator motor/ ringer | |
9. | USB/Data Cables, HDMI Cables | |
10. | Capital goods for all the goods covered under SPECS | |
11. | Active Components:
a. Discrete semiconductor devices including transistors, diodes, etc. b. Power semiconductors including FETs, MOSFETs, Thyristors, etc. |
15 Cr |
12. | Preform of Silica and Optical Fiber | |
13. | Display Assembly and Touch Panel/ Cover Glass Assembly | |
14. | Micro/Nano-electronic components such as Micro Electro Mechanical Systems (MEMS) and Nano Electro Mechanical Systems (NEMS) | 25 Cr |
15. | Assembly, Testing, Marking and Packaging (ATMP) units | |
16. | Mechanics (plastic and metal parts) for electronic applications | 75 Cr |
17. | Compound Semiconductors such as GaN, SiC, GaAs, etc. and Silicon Photonics devices/ Integrated Circuits, Optoelectronic components | 250 Cr |
18. | Semiconductor Wafers | 500 Cr |
19. | Semiconductor Integrated Chips (ICs) including Logic [Microprocessor, Microcontrollers, Digital Signal Processors (DSP), Application Specific Integrated Circuits (ASICs), etc.]; Memory; Analog/ Mixed Signal ICs, etc. | 1,000 Cr |
20. | Display fabrication units including Liquid Crystal Displays (LCD), Light Emitting Diode (LED), Organic Light Emitting Diode (OLED), etc. for electronic applications |
https://meity.gov.in/writereaddata/files/scheme_for_promotion_of_manufacturing_of_electronic_components_and_semiconductors.pdf
The manufacturing of electronic components and semiconductors is capital intensive and must deal with constantly changing technology. A vibrant electronic component manufacturing ecosystem is vital for the overall long-term and sustainable growth of electronics manufacturing in India and to achieve net positive Balance of Payments (BoP).
The above content is summarized for ease by author, for detailed guideline and process, the ministry link as give above to be followed.