To boost India’s electronics manufacturing, the Union Cabinet greenlighted a ₹229.19 billion scheme, looking at more global investments, reducing imports, and creating 91,600 jobs over six years.
On Friday, the Union Cabinet, led by Prime Minister Narendra Modi, approved the Electronics Component Manufacturing Scheme with a funding allocation of ₹229.19 billion. Focusing on building a self-reliant global supply chain, the Ministry of Electronics and Information Technology (MeitY) stated that this initiative will reduce the country’s dependency on imports.
Furthermore, the scheme is designed to enhance domestic value addition (DVA), build advanced manufacturing capacity, and integrate Indian companies into global value chains (GVCs).
It is expected to generate a total investment of ₹593.5 billion, contribute approximately ₹4.56 trillion to the economy through production, and create around 91,600 direct jobs, with numerous additional indirect employment opportunities.
According to MeitY, the initiative has a tailored approach to provide differentiated incentives for various segments of the electronics manufacturing ecosystem. The target segments under the scheme, along with their respective incentive structures, are as follows:
Sub-assemblies
This includes display and camera modules, which will receive a turnover-linked incentive.
Bare components
Again set to benefit from turnover-based incentives, this includes:
- Non-surface mount devices (non-SMD) passive components:
- Electro-mechanical components for Electronic Applications:
- Multi-layer Printed Circuit Boards (PCBs):
- Li-ion Cells for Digital Applications (Excluding Storage and Mobility):
- Enclosures for Mobile and IT Hardware Products
Selected bare components (will be incentivised through a hybrid model)
- High-density interconnect (HDI) and modified semi-additive process (MSAP) PCBs
- Flexible PCBs
- Surface mount device (SMD) passive components
The scheme will also offer capital expenditure (CapEx) incentives to manufacturers producing parts for sub-assemblies (A) and bare components (B) and (C), as well as to companies making capital goods for electronics. This aims to strengthen the supply chain and boost infrastructure development in the sector. It will run for six years, with a one-year gestation period, and part of the incentives will be tied to meeting employment targets, ensuring sustainable job creation.
In a recent report, MeitY acknowledged that the domestic production of electronic goods has grown from ₹1.90 trillion in FY 2014-15 to ₹9.52 trillion in FY 2023-24, reflecting a compound annual growth rate (CAGR) of over 17%.
Similarly, exports of electronic goods have risen from ₹380 billion in FY 2014-15 to ₹2.41 trillion in FY 2023-24, showing a CAGR of over 20%.
“Electronics is one of the highest-traded and fastest-growing industries globally and is expected to play a pivotal role in shaping the global economy and advancing a country’s economic and technological development,” the Ministry expressed in a statement.
