Electronic Component Manufacturing Scheme

Prelims – General Science & Sustainable Development | Current events of national & international importance.

Mains (GS III) – Technology, Economic Development

Why in news?

Recently, the Union Cabinet had approved the Electronics Component Manufacturing Scheme to make India Atmanirbhar in electronics supply chain.

What is Electronic Component Manufacturing Scheme?

It is a central sector scheme to expand electronics manufacturing beyond semiconductors, IT hardware, and mobile phones.
Nodal agency - Ministry of Electronics and Information Technology (MeitY).
Objectives – Developing a robust component ecosystem by attracting large investments (global/domestic) in electronics component manufacturing ecosystem.
Increasing Domestic Value Addition (DVA) by developing capacity and capabilities.
Integrating Indian companies with Global Value Chains (GVCs).
Budget - Rs.22,919 crore.
Tenure - 6 years with 1 year of gestation period.
Targets
- Rs59,350 crore in investments
- Production worth Rs4,56,500 crore
- Creation of 91,600 direct jobs in the coming years.

Status of Electronics Segment in India

Electronics is one of the highest-traded and fastest-growing industries globally.
Role of electronics – It is expected to play a pivotal role in shaping the global economy and advancing a country's economic and technological development.
Since electronics permeates all sectors of economy it has economic and strategic importance.
With various initiatives of Gol, the electronics manufacturing sector has witnessed remarkable growth in the last decade.
Domestic production of electronic goods – It has increased at a CAGR of more than 17% from FY 2014-15 to FY 2023-24.
Exports of electronic goods - It have also increased from FY 2014-15 to to FY 2023-24 at a CAGR of more than 20%.

What are its features?

It provides differentiated incentives to Indian manufacturers tailored to overcome specific disabilities for various categories of components and sub-assemblies.
Thus, manufacturers can acquire technological capabilities and achieve economies of scale.
Electronic Component Manufacturing Scheme – They are classified under 4 categories.
- Sub-assemblies
- Bare components
- Selected bare components
- Supply chain ecosystem & capital equipment for electronics manufacturing
Incentives – Turnover linked incentive, Hybrid incentive and capex incentives.
Unlike previous schemes, it is not based on a production-linked incentive, where manufacturers will be rewarded for incremental manufacturing.

Turnover linked incentives are based on the total revenue generated by a manufacturing unit from the sale of its products over a specific period.

Payout of a part of the incentive is linked with employment targets achievement.

What are the benefits of the scheme?

Boosts domestic manufacturing – It can reduce import dependency by promoting the production of semiconductors, circuit boards, and batteries.
- It aims for Rs59,350 crore in investments, encouraging factories and R&D centers.
Generates employment – It is expected to create 91,600 direct jobs and more in related sectors.
Enhances value addition – It shifts focus from assembly to component manufacturing, strengthening economic resilience.
Supports self-reliance – It advances Make in India and Secures the Electronics Supply Chain.
Strengthens tech leadership – It can aid AI, Internet of Things, and EV development, boosting India’s global tech position.
Stable incentives model – Rewards turnover and employment creation over mere production increases.

Quick Facts

Ministry Of Electronics and Information Technology

Establishment – 2016.
It is carved out from the Ministry of Communications and Information Technology, based on Narayana Murthy Committee recommendations)
Mission – To advance Digital Governance, foster inclusive growth in electronics and IT, strengthen Internet Governance, promote R&D and innovation, and ensure cybersecurity.
Key Objectives
- e-Government – Develop e-infrastructure for digital services.
- e-Industry – Support electronics manufacturing and IT-ITeS sector.
- e-Innovation/R&D – Build research and innovation infrastructure.
- e-Learning – Promote digital skills and knowledge networks.
- e-Security – Secure India’s cyberspace.
- e-Inclusion – Leveraging ICT for Inclusive Growth.

Reference

PIB| Approval of New Electronic Component Manufacturing Scheme

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