The electronics industry in India has put forward a major production-linked incentive (PLI) scheme to the government.
The India Cellular & Electronics Association (ICEA) has emphasized the need for a substantial incentive scheme, valued between Rs 30,000-35,000 crore, to meet the escalating demand for mobile phones and other electronic devices. The ICEA report projects that demand could reach $75-$80 billion by 2026 and surge to $300 billion by 2032.
Aiming to enhance domestic value addition in manufacturing, particularly in the mobile phone sector, the ICEA seeks to increase this from the current 18% to a target of 35-40%. A robust semiconductor ecosystem is deemed crucial for this manufacturing progress.
The electronics industry has proposed a 4-6% incentive structure to the Ministry of Electronics and Information Technology. This incentive covers manufacturing various sub-assemblies and components, such as high-end printed circuit boards and surface mount components. The proposed Production Linked Incentive (PLI) plan spans eight years, allowing companies to claim incentives over six years within this period. Firms investing Rs 1,000 crore or more in key areas like SMD passive components and lithium-ion cells are suggested to receive 40% capital expenditure support.
To decrease reliance on imports, the industry stresses the need to foster an indigenous semiconductor ecosystem, backed by localized operations and increased value addition. The proposal includes measures to initiate commercial component production within two to three years, aiming for domestic manufacturing to meet a significant portion of global demand within six to seven years.
Support for supply chain ancillary units and critical sub-assemblies with capex assistance and incentives linked to incremental sales is also recommended. Additionally, interest subsidies for component production are proposed to mitigate the high cost of finance.
ICEA highlights strategies to advance India’s semiconductor design and intellectual property (IP) creation. This includes investment from large Indian corporations and recognizing chip design as a strategic sector. Establishing an exclusive market exchange for the electronics and hi-tech industry is also suggested.
Overall, the industry’s proposal underscores a comprehensive effort to bolster India’s electronics manufacturing sector and position the country as a major player in the global market.
