In a landmark decision aimed at strengthening India’s electronics manufacturing ecosystem, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a ₹22,919 crore Electronics Component Manufacturing Scheme. The initiative is designed to enhance domestic production capabilities, reduce reliance on imports, and attract substantial investments. This move is expected to play a crucial role in India’s journey towards self-reliance in electronics manufacturing.
In This Article:
Objectives of the Scheme
The newly announced Electronics Component Manufacturing Scheme is strategically crafted to:
- Enhance India’s Electronics Manufacturing Capabilities: Encouraging local production of electronic components that are currently imported.
- Attract Investments: Draw both domestic and foreign investments into India’s electronics manufacturing sector.
- Boost Domestic Value Addition (DVA): Increase local sourcing of raw materials and reduce dependency on foreign suppliers.
- Strengthen Global Integration: Ensure Indian firms become a part of global value chains (GVCs) in the electronics industry.
- Job Creation: Generate thousands of new employment opportunities in the sector.
Key Features of the Scheme
The Electronics Component Manufacturing Scheme provides structured incentives to address sector-specific challenges and support growth:
- Differentiated Incentives: Financial assistance varies across different categories of components and sub-assemblies to ensure targeted support.
- Technology Advancement: Encourages acquisition of new technologies and R&D to enhance production efficiency.
- Six-Year Duration: The scheme will be implemented over six years, including a one-year gestation period.
- Employment-linked Incentives: A portion of the financial benefits is tied to employment generation targets.
Expected Outcomes
The Government of India has projected the following outcomes from the scheme:
- Investment Inflow: ₹59,350 crore of fresh investments into the electronics manufacturing sector.
- Increased Production: Electronics component manufacturing is expected to grow to ₹4,56,500 crore in output.
- Job Creation: The scheme aims to create 91,600 direct jobs and thousands of indirect employment opportunities.
India’s Electronics Manufacturing Growth
India has emerged as one of the fastest-growing electronics manufacturing hubs in the world. Over the past decade, the sector has witnessed remarkable growth:
- Electronics Production Surge: Increased from ₹1.90 lakh crore in FY 2014-15 to ₹9.52 lakh crore in FY 2023-24, a CAGR of over 17%.
- Exports Boom: Electronics exports rose from ₹0.38 lakh crore to ₹2.41 lakh crore in the same period, recording a CAGR of over 20%.
- Mobile Manufacturing Growth: India has become the second-largest mobile phone manufacturer globally, thanks to past PLI schemes.
Industry Reactions
The Electronics Industries Association of India (Elcina) and other stakeholders have welcomed the move, seeing it as a major step towards strengthening India’s position in the global electronics industry. Industry experts believe this will encourage local component manufacturing, reducing the dependency on China, Taiwan, and South Korea.
According to Rajoo Goel, Secretary General, Elcina, “This scheme is a long-awaited step and will significantly boost domestic component production. We expect more clarity on incentives, especially for startups and MSMEs in the sector.”
Challenges and Road Ahead
While the Electronics Component Manufacturing Scheme is a positive step, certain challenges must be addressed:
- Infrastructure Development: Ensuring world-class manufacturing hubs with reliable power, logistics, and skilled workforce.
- Speed of Implementation: Fast-tracking the incentive disbursal process to encourage early investments.
- R&D and Innovation: Strengthening research & development initiatives to support long-term growth.
If effectively implemented, this scheme has the potential to transform India into a global leader in electronics component manufacturing, significantly reducing import dependency and fostering a self-reliant electronics ecosystem.
Moving Ahead
The ₹22,919 crore Electronics Component Manufacturing Scheme is a game-changer for India’s electronics industry. By boosting domestic manufacturing, attracting investments, and creating employment opportunities, this initiative is expected to drive India’s ambitions of becoming a global electronics manufacturing hub. With the right execution strategy, this scheme could redefine India’s position in global supply chains, making it a competitive player in the high-tech manufacturing space.
By – Nikita
