The National Policy on Electronics (NPE) 2019-Effective April 2020

India’s share of contribution in the world of hardware electronics production is 3.4% and in the domestic or national scenario the contribution of electronics is 2.3% of the GDP.

India’s share of contribution in the world of hardware electronics production is 3.4% and in the domestic or national scenario the contribution of electronics is 2.3% of the GDP. From the available statistics, currently India has registered an increase of over 26.7% of the global electronics hardware production. It is noteworthy that in the last 4 years itself the electronics manufacturing has grown rapidly with a CAGR of around 25%. Therefore, in order to further boost the fast growing Electronic field the Government of India introduced the National Policy on Electronics (NPE) 2019, effective April 2020 to create a system for globally competitive ESDM sector by boosting in house manufacturing and export in the entire demand of ESDM. It mainly aims at replacing the National Policy of Electronics 2012 (NPE 2012).
 
In order to advance the electronics sector, the MeitY officially launched Schemes and Guidelines under NPE 2019 in April 2020. The main Policy has lead to the formulation of several schemes, initiatives, projects and measures for the development of ESDM sector in the country, as per the directions in the Policy guidelines. The 3 schemes approved under the main policy, are the Production Linked Incentive Scheme (PLI), Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and Modified Electronics Manufacturing Clusters Scheme (EMC 2.0) the purpose of all the schemes is to encourage electronics manufacturing in the country and the amalgamated budget expense for the schemes is approximately 48,000 crores. In order to make the best use of these schemes we need to understand the objectives of the schemes, as under:-
 
Production Linked Incentive Scheme (PLI)

As per the objective listed under the Scheme, for Large Scale Electronics Manufacturing this scheme proposes a financial encouragement to enhance domestic manufacturing and attract large investments in the electronics chain including electronic components and semiconductor packaging. The aim of the Scheme is to target sections like Mobile Phones and electronic components as listed under Annexure B of the Scheme.

The Scheme has been floated for a period of 5 years from the base year viz: 2019-20. The companies engaged in manufacturing target segments are eligible for support under the scheme. Also, Contract manufacturers defined in the FDI Policy Circular    of 2017 are eligible for the Scheme.

Under the Scheme incentives shall extend for about  4% to 6% on incremental sales over base year of goods manufactured in India and covered under the target segments, to various worthy companies as listed under the Scheme. When submitting the Application the mandatory documents are

  1. Certified copy of the memorandum and articles of association.
  2. Self-certified copies of PAN, GST Certificate for applicant, brief profile of Chairman, CEO and CXOs, Annual Reports including Annual Financial Reports along with schedules for 3 years. In addition, Self-Certified Annual returns of the Parent Company are required.
  3. Certificate from Company Secretary / Board of Directors that give details of presence in RBI’s Defaulter and Wilful Defaulter Lists, SEBI Debarred List and CIBIL Score.
 
The IT minister expects that this scheme will lead to an investment of Rs. 20 Lakh crore and generate 25 lakhs of employment initiatives in the next 5 years.

Therefore, it will surely create a boost to make India recuperate financially and technologically as well.
  
Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)
 
The Government in April this year proposed a scheme to provide financial assistance to increase domestic manufacturing and magnetise large investments in the electronics value chain and this included electronic components and semiconductor packing.
 
Inventory of eligible goods included as part of Annexure to the notification incorporated SMT components including LED Chips, Printed Circuit Boards (PCBs), Camera Modules, The tenure proposed for the Scheme was 5 years and would be a major boost for promoting component manufacturing in the country.
 
The manner of procuring the incentive is 25% of capital expenditure for manufacture of specified goods at inception and thereafter, Incentives are provided on reimbursement basis. The Application to claim the incentive is to be filed within 3 years of the Notification. It is to be kept in mind that to receive the incentive under SPECS the concerned unit will have to remain in commercial production for a period of minimum 3 years from the date of commencement of production or for 1 year from the date of receipt of last incentive, whichever is later.
 
The budget outlay for this scheme is Rs 3,285 crore covering a period of eight years and will help create a lot of jobs both directly and indirectly.
  
Modified Electronics Manufacturing Clusters Scheme (EMC 2.0)
 
The captioned scheme is a scheme mainly for development of best infrastructure along with common facilities and amenities through Electronics Manufacturing Clusters (EMCs). Thus, we can say the main objective of the scheme is to provide support for construction of the best infrastructure for attracting investments in the Electronics Systems Design and Manufacturing (ESDM) sector. The main aim is to make India a pivot for mobile and component manufacturing by upgrading common technical infrastructure and providing common facilities for the companies in EMCs, Industrial Areas or Parks.
 
Electronics production as on date accounts for 2.3% of India’s GDP. Now under this scheme 20 Greenfield EMCs and 3 Common Facility Centres (CFCs) have been approved in 15 states across the country to boost further production. The total incentive amount for a period of 8 years is Rs 3,762.25 crore spread over with an objective to create 10 lakh direct and indirect jobs under the scheme.

It will aim to provide financial assistance up to 50% of the project cost subject to a ceiling of Rs 70 crore per 100 acres of land for setting up of Electronics Manufacturing Cluster projects. Nevertheless, the Electronic manufacturing groups to be set up under the scheme will be spread in an area of 200 acres across India and 100 acres in North East part of the country. 

Emerging trends

The emergence of the 3 schemes in the electronic sector, aims at inviting atleast 1 lakh crore investments to this sector, to create more than 20 lakh direct and indirect employment opportunities.  It proposes to create a foundation to catapult the growth of ESDM industry in our country and promote industry specific research and innovation in all sub-sectors of the electronics field, being emerging technology areas such as 5G, loT/ Sensors, Artificial Intelligence (Al), Machine Learning, Virtual Reality (VR), Drones,   Robotics,   Additive   Manufacturing,   Photonics, Nano-based devices, etc. This in turn will promote trusted electronics supply initiatives to improve national cyber security contour.