Calling for reforms in India’s electronics sector, ESC has urged for a refinement of the DLI scheme, additional tax incentives for R&D, and increased funding in Budget 2025.
The Electronics and Computer Software Export Promotion Council (ESC) of India has called for a recalibration of the Design Linked Incentive (DLI) scheme, aiming to make it more comprehensive and impactful.
According to a report by the Economic Times, the industry body recently advocated for enhanced incentives to boost research and development (R&D) in India’s capital-intensive electronics hardware sector during a meeting with Finance Minister Nirmala Sitharaman.
ESC has proposed additional tax benefits, specifically an income tax reduction for Indian companies investing more than 3% of their turnover in R&D and filing patents or designs within India.
This initiative is intended to stimulate innovation and foster growth in advanced technology sectors such as AI, IoT, telecom, and defence, particularly in semiconductors and consumer electronics.
Moreover, ESC has requested an extension of the DLI scheme for another decade, until 2035, to provide long-term stability for companies engaging in high-risk R&D projects. The body also recommended that unutilised funds from the current scheme be carried over into subsequent years, ensuring optimal resource allocation.
Additionally, ESC has urged for a US$20 billion increase in funding for the scheme to support emerging fields like quantum technologies.
To incentivise further innovation, ESC has proposed a 10-year tax holiday on revenue from products with intellectual property (IP) developed through in-house R&D. This tax relief would encourage domestic companies to invest in innovative technologies and reduce reliance on foreign patents.
Despite India’s electronics sector being valued at USD 155 billion in 2022 and projected to grow to USD 300 billion by 2025-26, ESC highlighted that the country’s R&D expenditure remains comparatively low, far behind global leaders like China, the USA, and Israel. The industry body urged policies that align India’s R&D spending with its growth potential.
