By Shantam Sharma and Ms. Aishwarya Rajput
Introduction
India’s electronics industry has witnessed remarkable expansion, reaching a market size of USD 155 billion in FY23. Production has surged, nearly doubling from USD 48 billion in FY17 to USD 101 billion in FY23. This impressive growth has been largely fueled by the mobile phone segment, which now accounts for 43% of the country’s total electronics output.[1]
India is making substantial progress in strengthening its electronics manufacturing industry while actively working to decrease its dependence on imports, especially from China. The government is set to introduce a new incentive scheme, allocating up to $5 billion to encourage local production of key components for a wide range of electronic devices, from smartphones to laptops.[2]
Key Elements of the Incentive Scheme [3]:
| Key Focus Areas | Details |
| Target Components | The scheme focuses on critical components like printed circuit boards (PCBs) to boost domestic production and strengthen the supply chain. |
| Expanding Domestic Value Addition | Aims to increase local value addition in electronics manufacturing, generating jobs and driving economic growth. |
| Global Ambition | India targets a $500 billion electronics manufacturing sector by 2030, including $150 billion in component production. |
| Addressing Import Dependency | Seeks to reduce reliance on imports, particularly from China and Hong Kong, by promoting self-reliance through incentives. |
Objectives of the Incentive Scheme:
The new incentive scheme aims to boost India’s electronics manufacturing sector by focusing on critical components like printed circuit boards (PCBs). It seeks to strengthen the supply chain, reduce import dependency, and enhance domestic value addition, supporting India’s goal of a $500 billion electronics industry by 2030.
Complementing this initiative, existing schemes like the Production Linked Incentive (PLI) Scheme, Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), and Modified Electronics Manufacturing Clusters Scheme (EMC 2.0) have already laid a strong foundation by promoting large-scale production, supporting capital investments, and developing infrastructure. The new scheme builds on these efforts, addressing key gaps in component manufacturing and enhancing supply chain resilience.
Existing Schemes for Benefit of Electronic Industries in India[4]
| Scheme | Objective | Key Features | Financial Incentives | Duration & Funding |
| Production Linked Incentive (PLI) Scheme | Encouraged the expansion of large-scale electronics manufacturing in India. | – Offered a 4% to 6% incentive on incremental sales for five years. -Covered costs associated with research and development, testing, design tools, technology licenses, patents, and ATMP units. – Required companies to be registered in India and manufacture within target segments. |
– Global firms: Had to achieve ₹10,000 crore revenue in 2019-20. – Domestic firms: Required ₹100 crore revenue from mobile manufacturing. – Other components: Required ₹50 crore revenue. |
Ran for a 5-year period. |
| Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) | Enhanced the robustness of India’s electronics manufacturing value chain. | – Targeted electronic components, semiconductor/display fabs, ATMP units, sub-assemblies, and capital goods. – Boosted domestic value addition in the ESDM ecosystem. |
Provided a 25% financial incentive on capital expenditure (reimbursement basis). | – Accepted applications for 3 years. – Investments made within 5 years were eligible for incentives. – Total funding: ~USD 440 million. |
| Modified Electronics Manufacturing Clusters Scheme (EMC 2.0) | Developed high-quality infrastructure to attract global manufacturers. | – Provided financial support for EMC projects, including common facilities and amenities (RBF sheds, Plug-and-Play). | – Covered 50% of project cost, up to INR 70 crore per 100 acres. – Covered 75% of Common Facility Centre (CFC) cost, up to INR 70 crore. |
– Accepted applications for 3 years (from April 1, 2020). – Funds were disbursed over 5 years. – Total allocation: ~USD 500 million. |
Conclusion
The electronics industry offers numerous opportunities driven by the growth of digital technologies, artificial intelligence, mobile networks, and the advancement of 5G technologies.
The new incentive scheme is designed to accelerate India’s growth as a global electronics manufacturing hub by focusing on critical components like printed circuit boards (PCBs). By promoting domestic production, the scheme aims to strengthen the supply chain, reduce import dependency—particularly from China and Hong Kong—and enhance local value addition.
Building upon this foundation, India has already implemented several successful schemes to support the electronics manufacturing sector. The Production Linked Incentive (PLI) Scheme incentivized large-scale production through financial benefits on incremental sales. The Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) strengthened the electronic manufacturing value chain by offering capital expenditure support. Additionally, the Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme focused on developing high-quality infrastructure to attract global manufacturers. These existing schemes have played a crucial role in establishing a robust ecosystem, and the new incentive scheme aims to complement and enhance these efforts by addressing key gaps in component manufacturing and supply chain resilience.
[1]Available at https://pib.gov.in/PressReleseDetailm.aspx?PRID=2034096®=3&lang=1
[2]Available at https://www.business-standard.com/industry/news/india-to-offer-5-bn-in-incentives-to-electronics-firms-wean-off-china-124112200680_1.html
[4]Available at https://www.makeinindia.com/schemes-electronics-manufacturing-india