In a recent step, the IT ministry decided to launch a 23K Crore electronic component scheme to increase domestic production. It is in line with India’s ambition to increase domestically manufactured components and become “Aatmanirbhar”. The plan will run for six years and is hailed as the next best thing after the PLI scheme in the sector.
The scheme comes at a time when the global crisis deepens shifting focus to “strategic autonomy”, it will ensure cheaper and easier availability of electronic components and make India reliable in its domestic production in the future.
Along with this it also promises to generate 91,600 direct jobs. The problem with the current scenario is despite bringing companies like Apple to assemble in the country the value addition from the country is fairly low–15 to 20 per cent. Through this scheme, the aim is to increase this percentage to about 30 to 40 per cent.
Three kinds of incentives are provided under the plan: which depends on the operational expense, capital expense, and both combined. The operational incentive just like PLI will be given on incremental sales, while the capital incentive will be based on capital expenditure. The subsidy is open to greenfield as well as brownfield companies, and investment by foreign players can be in the form of technology transfer or creating a venture with a domestic company.
India’s domestic demand is increasing and this leads to imports of these components, electronics is the second largest imported commodity after oil in India. This plan provides a well-structured process to solve this mismatch and fulfil the demands through domestic supply. The success of the scheme however will be fully assessed once the production and process of implementation set in.
