The Cabinet has approved three key schemes to boost electronics and components manufacturing exports and production in the country. These schemes envisage a total outlay of Rs 480.42 billion.

Among the three key schemes, Production-Linked Incentive (PLI) scheme comes with the highest outlay, worth Rs 409.95 billion. This scheme is spread over five years and aims to boost smartphones and components’ manufacturing.

For the second scheme, Promotion of Manufacturing of Electronics Components and Semiconductors (SPECS), an outlay of Rs 32.85 billion has been earmarked to provide a capital subsidy of 25 per cent over eight years.

Further, the estimated outlay for the third scheme, Electronics Manufacturing Clusters (EMC) 2.0 is Rs 37.62 billion over eight years. This scheme is designed to promote mega electronic clusters.

As per the government, incentives will be linked to incremental sales and capital investment of the companies under the PLI scheme. 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 20 per cent-25 per cent. The PLI plan will help boost local investments in mobile phone manufacturing and specified electronic components, including assembly, testing, marking and packaging (ATMP) units.

Moreover, the SPECS scheme will provide financial incentives for select electronic goods comprising downstream value chain of electronic products, i.e., electronic components, semiconductor/ display fabrication units, ATMP units, etc. While, the EMC will provide financial assistance of upto 50 per cent of the project cost, subject to a ceiling of Rs 700 million per 100 acres of land for setting up an electronic manufacturing cluster projects.

The government expects the schemes to bring in new investments worth Rs 500 billion, push local production of mobile phones and components to around Rs 10 trillion by 2025 and generate employment for around 2 million people.

Further, the government added that these schemes are expected to have a combined impact of overcoming around 6 per cent -10 per cent of disability in electronics manufacturing and bring the country on par with other competing nations such as Vietnam.