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The Indian government is preparing to launch a new production-linked incentive (PLI) scheme worth approximately Rs 40,000 crore aimed at boosting the manufacturing of electronics sub-assemblies and components. This initiative is part of the upcoming Budget 2024 and is intended to strengthen the domestic electronics manufacturing sector.
The primary objective of this scheme is to significantly increase local value addition in electronics manufacturing. Currently, the value addition is around 18-20%, but the new scheme aims to raise this to 35-40%, aligning with global standards like those of China. This enhanced local value addition will help reduce reliance on imports and bolster India’s electronics manufacturing capabilities.
The proposed PLI scheme will replace the existing Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), which ended in March 2024. SPECS provided a 25% financial incentive on capital expenditure for various electronic goods, including components and semiconductor fabrication units. The new scheme will continue to offer substantial incentives but with an updated framework to better support the current needs of the industry.
The India Cellular & Electronics Association (ICEA) has been actively advocating for this scheme, emphasizing its importance for meeting the rising demand for electronic components. The ICEA has proposed an eight-year PLI plan, allowing companies to claim incentives over six years within this period. They also suggested that companies investing Rs 1,000 crore or more in manufacturing specific components like surface-mount devices (SMD), lithium-ion cells, and high-end printed circuit boards (PCBs) should receive 40% capital expenditure support.
Additionally, the scheme aims to support the broader goal set by the National Policy on Electronics (NPE) 2019, which targets achieving $300 billion in electronics production by 2025-26. This ambitious target underscores the importance of the PLI scheme in driving the growth of India’s electronics manufacturing sector and enhancing its global competitiveness.
