A new policy to govern the electronics industry in India has been drafted by the Government of India’s Ministry of Electronics and Information Technology. The highlight of this draft policy is the government’s objective to lift the value of electronics goods manufactured in India to $400 billion by the year 2015.
Mobile phones will be a major thrust area within this plan envisaging the doubling of the number of mobile phones produced in India from the current 500 million pieces to 1 billion by 2025. As many as 600 million phones out of this projected manufacture is being targeted for export valued at $110 billion.
The government has also proposed to alter the existing incentive schemes and make it easier for businesses to setup and run their operations. The draft policy is now in the public domain for all the stakeholders to study and offer their feedback.
The existing Modified Special Incentive Package scheme (M-SIPS), which was framed by the previous government in 2012, provided for investment subsidies for manufacturing companies in the electronics sector. It was 20% for those in the SEZ locations and 25% outside the SEZs. Government statistics reveal that till date under this policy, some 265 applications had been received and 139 have actually commenced production making a total investment of over Rs 8,000 crore. Approvals, however, have been issued to 188 and the amount proposed to be invested by them was in the region of Rs 40,000 crore.
Though the draft policy for the electronics industry has not touched on the sensitive subject of job creation in the sector. However, there is a mention regarding the need for skilled manpower and how the government proposes to help in improving the situation in this sphere so that the electronics system design and manufacturing industry can derive direct benefit from it.
Another point brought out in the new draft policy is that of the 200 Electronics Manufacturing Clusters proposed in the 2012 policy, hardly 23 have been started so far.
The new policy indicates that the government is keen to promote all the sub-sectors within the electronics industry that include electronic components and semiconductors, defence electronics, automotive electronics, industrial electronics, strategic Electronics etc.
In terms of the incentives proposed under the new draft policy, there is a proposal to offer direct tax benefits like IT exemptions linked to the investments made by the industries.