Cabinet approves production-linked incentives for electronics mfg firms

NEW DELHI: The Union Cabinet has approved production-linked incentives worth Rs 40,995 crore for electronics manufacturing companies.

Sharing further details, Union Communications Minister Ravi Shankar Prasad on Saturday said the government will dole out incentives worth Rs 40,995 crore to boost manufacturing of electronics products.

“Two long-term policy decisions have been taken to make India hub of electronics manufacturing in new directions and medical electronics. Cabinet has approved production linked-incentive for electronics companies. We will give Rs 40,995 crore in the coming five years for production linked-incentive,” Prasad said.

Incentives will be linked to incremental sales and capital investment of the companies, he added.

“...because of these schemes, we hope to generate manufacturing revenue potential of Rs 10 lakh crore by 2025,” Prasad said.

The minister said that incentive of 25 per cent will be given on capital investment under the scheme.

In a statement, the Ministry of Electronics and Information Technology said the scheme is aimed at boosting domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking

Incentives will be linked to incremental sales and capital investment of the companies, Union Communications Minister Ravi Shankar Prasad added

and Packaging (ATMP) units.

“The scheme shall extend an incentive of 4 per cent to 6 per cent on incremental sales over base year of goods manufactured in India and covered under target segments, to eligible companies, for a period of five years subsequent to the base year as defined. Due to this the domestic value addition for mobile phones is expected to rise to 35 per cent to 40 per cent by 2025 from the current level of 2 per cent-25 per cent,” it said.

The statement further said that the scheme has a potential to generate a total employment opportunity of about eight lakh, both direct and indirect.

The value of electronics produced in India, it said, has reached Rs 4,58,006 crore in 2018-19 from Rs 1,90,366 crore (USD in 2014-15 at a compound annual growth rate (CAGR) of about 25 per cent.

India’s share in global electronics manufacturing has grown almost 2.5 times in 6 years i.e. from around 1.3 per cent in 2012 to 3 per cent in 2018.

The country’s export of electronic goods also increased substantially from Rs 41,220 crore in 2017-18 to Rs 61,908 crore in 2018-19.

“As per industry estimates, electronics manufacturing has generated employment for over 20 lakh persons across the country,” it said.