Published On:March 23 2020
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Cabinet OKs Rs. 48K Cr proposals to boost local electronics manufacturing.

The Cabinet has approved three key schemes to boost electronics and components manufacturing exports and production in the country, with a total outlay of Rs. 48,042.25 crore. The plans are expected to bring in new investments of Rs. 50,000 crore, push local production of mobile phones and components to around INR 10 lakh crore by 2025 and generate employment for some 20 lakh people.

The biggest of the three is the Rs. 40,995-crore Production-Linked Incentive (PLI) scheme spread over five years to boost smartphones and components’ manufacturing. The second is the Promotion of Manufacturing of Electronics Components and Semiconductors (SPECS) for which Rs. 3,285 crore has been earmarked to provide a capital subsidy of 25% over eight years. The third is the Electronics Manufacturing Clusters (EMC) 2.0 which has an outlay of Rs. 3,762.25 crore over eight years which is designed to promote mega electronic clusters.

Speaking at a Cabinet briefing on Saturday, Union minister for electronics and IT, Ravi Shankar Prasad said that the schemes were targeted to attract the top five-six global companies to set-up supply chains in India and to create two to four "champion Indian companies.

"These schemes will play a big role in realising the dream of $1 trillion digital economy by 2025," Prasad said.

Incentives will be linked to incremental sales and capital investment of the companies under the PLI scheme, the government said. "The scheme shall extend an incentive of 4% to 6% on incremental sales over base year of goods manufactured in India and covered under target segments, to eligible companies, for a period of five years subsequent to the base year as defined. Due to this the domestic value addition for mobile phones is expected to rise to 35% to 40% by 2025 from the current level of 20%-25 %".

It added that the schemes are expected to have a combined impact of overcoming around 6%-10% of disability in electronics manufacturing and bring the country on par with other competing nations such as Vietnam.

“The PLI has potential to make India one of the three countries that can serve the over 200 countries demand worldwide for whom electronics and particularly mobile phones is a top ranking import,” Indian Cellular and Electronics Association Chairman Pankaj Mohndroo said on Saturday. ICEA represents, Apple, Foxconn, Oppo and Vivo amongst other industry players.

The PLI plan will help wooing local investments in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units.

SPECS will provide financial incentive for select electronic goods that comprise downstream value chain of electronic products, i.e., electronic components, semiconductor/ display fabrication units, ATMP units, etc. EMC will provide financial assistance of upto 50% of the project cost, subject to a ceiling of Rs. 70 crore per 100 acres of land for setting up an electronic manufacturing cluster projects.

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