The Ministry of Electronics and Information Technology (MeitY) is seeking the Union Cabinet's permission for a Rs 40,000 crore package in December to boost domestic manufacturing of electronic components.
The funding package is intended to include capital expenditure subsidies as well as production-linked incentives (PLI) to support job creation and the development of an electronic component manufacturing ecosystem. The scheme, which excludes semiconductor sectors, might see investments starting as early as April 2025 if the Cabinet approves the proposal without alterations. Quoting officials, the report said that this aligns with the government’s goal of integrating Indian companies into the global electronics value chain.
Increasing demand for electronic components
According to a Confederation of Indian Industry research, India's need for electronic components is expected to increase dramatically, from $45.5 billion in 2023 to $240 billion by 2030. The initiative aims to increase local value addition in electronics manufacturing from 15-18% to 35-40% during a five-year period, with the long-term goal of achieving 50%.
Final consultations are underway to avoid delays in establishing manufacturing facilities following the scheme's introduction. The program is intended to attract investments of Rs 82,000 crore and enable the production of components worth Rs 1.9-2.0 lakh crore. It will initially focus on mobile phone manufacturing before expanding to IT hardware.
The ministry is also considering whether to provide capital subsidies, operational incentives, or a combination of the two in order to minimize industry opposition similar to that seen during the IT hardware PLI plan.
If the Cabinet approves the deal in December, Indian enterprises will allegedly have about 90 days to interact with potential consumers and technological partners.
Request for expedited approval of JVs with overseas corporations
Industry players have requested the government to speed up approvals for joint ventures with corporations from Taiwan, South Korea, Japan, and China. Brands in the smartphone and IT hardware industries are actively encouraging their supply chain partners to invest in India through technology transfers or joint ventures under the plan.
Despite tremendous progress in electronic product assembly under existing PLI schemes, local value addition remains modest. The proposed method addresses this issue by focusing on the fabrication of printed circuit boards (PCBs), camera modules, display sub-assemblies, lithium-ion cells, speakers, vibrator motors, and mechanical parts. These components account for over 50% of the material expenses for mobile phones and laptops.
