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IT Ministry seeks Cabinet nod for Rs 40,000 cr electronics package in Dec

The financial package would include subsidies for capital expenditure and production-linked incentives to encourage job creation and develop an ecosystem for electronic component manufacturing

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Abhijeet Kumar New Delhi
3 min read Last Updated : Nov 29 2024 | 10:40 AM IST
The Ministry of Electronics and Information Technology (MeitY) is seeking the Union Cabinet’s approval for a Rs 40,000 crore package in December, aimed at enhancing domestic manufacturing of electronic components, according to a report by The Economic Times. 
 
The financial package is expected to include subsidies for capital expenditure and production-linked incentives (PLI) to encourage job creation and develop an ecosystem for electronic component manufacturing. The scheme, which excludes semiconductor sectors, could see investments beginning as early as April 2025 if the Cabinet approves the proposal without alterations. Quoting officials, the report said that this aligns with the government’s goal of integrating Indian companies into the global electronics value chain.
 

Rising demand for electronic components 

India’s demand for electronic components is forecasted to rise significantly, from $45.5 billion in 2023 to $240 billion by 2030, according to a Confederation of Indian Industry report. The scheme targets increasing local value addition in electronics manufacturing from the current 15-18 per cent to 35-40 per cent over its five-year duration, with a longer-term goal of reaching 50 per cent.
 
Final discussions are underway to prevent delays in setting up manufacturing facilities after the scheme’s launch, The Economic Times mentioned. The initiative is expected to attract investments totalling Rs 82,000 crore and facilitate the production of components worth Rs 1.9-2.0 lakh crore. It will primarily support mobile phone manufacturing and eventually extend to IT hardware.
 
The ministry is also deliberating on whether to offer capital subsidies, operational incentives, or a combination of both, to avoid industry resistance akin to the issues faced during the IT hardware PLI scheme.
 
Should the Cabinet approve the package in December, Indian companies will reportedly have approximately 90 days to establish connections with potential customers and technology partners.

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Request to expedite approval for JVs with international firms 

Industry stakeholders have urged the government to expedite approvals for joint ventures with companies from Taiwan, South Korea, Japan, and China. Brands in the smartphone and IT hardware sectors are actively engaging their supply chain partners to invest in India through technology transfers or joint ventures under the scheme.
 
Despite significant progress in the assembly of electronic products under existing PLI schemes, local value addition has remained limited. The proposed scheme seeks to address this by focusing on the production of components such as printed circuit boards (PCBs), camera modules, display sub-assemblies, lithium-ion cells, speakers, vibrator motors, and mechanical parts. These components collectively represent about 50 per cent of the material costs for mobile phones and laptops.
 

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Topics :BS Web ReportsIT ministryelectronics policyElectronics industry

First Published: Nov 29 2024 | 10:40 AM IST

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