Make In India: MeitY Plans Subsidies For Local Manufacturing Of Electronics

Taking forward the call of Prime Minister Narendra Modi to Make in India, the ministry of electronics and information technology (MeitY) has now proposed newer incentives to boost electronics manufacturing in India.

The proposals looks to offer 4-6% interest rate subsidy on loans for new investments, renewal of the electronic manufacturing cluster (EMC) scheme and waiver of collateral for loans taken to set up machinery.

The proposals have now been sent to the finance ministry for consideration. The government had set up an inter ministerial panel under PMO led by NITI Aayog. The panel is now working on a roadmap to develop India as a global hub for electronics manufacturing. “The MeitY secretary is part of the panel and we are giving them inputs, but simultaneously this proposal is also under consideration by the finance ministry,” an official told ET.

MeitY has also proposed allowing new entrepreneurs to set up manufacturing facilities without having to give personal collateral under the credit guarantee scheme. “Our industry’s problem is higher interest finance cost and providing collateral to banks, which is what we have tried to address in the proposal in order to nurture the hardware ecosystem,” the report added.

The proposals come after the three major government schemes that were designed to aid India’s manufacturing push in electronics ended last year – the Modified Special Incentive Package Scheme (MSIPS), EMC and the Electronic Development Fund. These schemes have not been renewed so far.

It is to be noted that the government had introduced new National Electronics Policy earlier this year. It aims at a turnover of $400 Bn in domestic electronics manufacturing by 2025, along with promoting ease of doing business for the electronic system design and manufacturing sector and encouraging industry-led research and development and innovation in new areas such as 5G.

It targets production of 1 Bn mobile handsets valued at $190 Bn by 2025, including export of 600 Mn handsets valued at $110 Bn.

Indian Minister of Communications and Minister of Law and Justice, Ravi Shankar Prasad had recently said that the government is aiming to make India a major export hub of electronics manufacturing.

According to the minister, India is the second biggest manufacturer of smartphones in the world. India has 282 mobile factories as compared to just two factories in 2014, he added.

According to the International Data Corporation’s (IDC) Asia/Pacific Quarterly Mobile Phone Tracker, the Indian smartphone market saw the highest-ever second-quarter shipment of 36.9 Mn in 2019.

The Indian market witnessed a 9.9 % year-on-year (YoY) and 14.8% quarter-on-quarter (QoQ) growth. In 2019, the import of smartphones took a jump of 7.6% with around 69.3 Mn mobile phones being shipped to India.

Also, recently, premium smartphone maker Apple started manufacturing iPhone 7 model in India, in addition to iPhone SE and iPhone 6s after Suresh Prabhu met the leadership board of Apple Inc in Davos, Switzerland, in January. The meeting included discussions on a deal to set up an Apple manufacturing unit in India.

Further, Samsung is reportedly planning to invest INR 2,500 Cr ($360 Mn) to transform its India operations into a hub for components business. While the companies are increasingly focused towards their India business, the Indian Cellular and Electronics Association (ICEA), which represents handset makers had criticised the current draft National Policy On Electronics claiming that it is not enough for attracting global companies.

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