70 Applications Received for Scheme to Produce Electronic Components

Syllabus: GS3/ Science and Technology

Context

• The Government of India has received 70 applications, 80% from small and medium enterprises (SMEs), for its Electronics Component Manufacturing Scheme.

Electronics Component Manufacturing Scheme

• It is a Rs.22,919 crore scheme, aims to develop a robust component ecosystem by;
  • Attracting large investments (global/domestic) in the electronics component manufacturing ecosystem, 
  • Increasing Domestic Value Addition (DVA) by developing capacity and capabilities, and 
  • Integrating Indian companies with Global Value Chains (GVCs).
• Salient Features of the Scheme:
  • The scheme provides differentiated incentives to Indian manufacturers tailored to overcome specific disabilities for various categories of components and sub-assemblies so that they can acquire technological capabilities and achieve economies of scale. 
  • The tenure of the scheme is six years with one year of gestation period.
  • Payout of a part of the incentive is linked with employment targets achievement.

Component Classification under the Scheme

• Category A: Display modules, camera module sub-assemblies.
• Category B: Bare components like non-surface mount devices, multi-layered PCBs, lithium-ion cells, IT hardware products.
• Category C: Flexible PCBs, SMD passive components.
• Category D: Capital goods and components used in manufacturing of A, B, and C.

Progress in India’s electronics sector

• The domestic production of electronic goods has increased from Rs.1.90 lakh crore in FY 2014-15 to Rs.9.52 lakh crore in FY 2023-24 at a CAGR of more than 17%. 
• The exports of electronic goods have also increased from Rs.0.38 lakh crore in FY 2014-15 to Rs.2.41 lakh crore in FY 2023-24 at a CAGR of more than 20%.

Challenges in electronics sector 

• Market Competition: The global electronics market is dominated by countries like China, Taiwan, USA, South Korea, Vietnam and Malaysia. 
• Technical Skills: There is a lack of adequately trained technical personnel for advanced manufacturing processes.
• Capital Intensive industry: Electronic manufacturing is a complex and technology-intensive sector with huge capital investments, high risk, long gestation and payback periods, requiring significant and sustained investments.

Government initiatives

• Make in India, Digital India, and Startup India are promoting domestic manufacturing and technological innovation.
• Production Linked Incentive Scheme (PLI): The scheme aims to attract large investments in the mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units.
• National Policy on Electronics 2019 (NPE 2019): It is a comprehensive framework to develop India as a global hub for electronics manufacturing.
• Modified Electronics Manufacturing Clusters (EMC 2.0) develops infrastructure with common amenities and industrial clusters for electronics production.

Way Ahead

• India has set a target to achieve 500 billion USD in electronics manufacturing in value terms by 2030.
• To enhance competitiveness, India needs to localize high-tech components, strengthen design capabilities through R&D investments, and forge strategic partnerships with global technology leaders.

Source: TH