How to change India’s ambitious ₹ 22,919 crore scheme to change electronics manufacturing – CNBC TV18

This bold initiative is ready to move towards self -sufficiency in the important electronics supply chain to India, which attracts both domestic and global investments. With the goal of creating a strong ecosystem for state -of -the -art component construction, the plan promises to run innovation, promote economic growth and increase the country’s competition in global supply chains.

Production -related incentive (PLI) schemes have traditionally focused on running older sales of domesticly manufactured goods, with the primary objective to promote local production and reduce dependence on imports. While this approach has made significant progress, it has not fully addressed some of the major challenges faced by India’s manufacturing sector. Major issues such as limited technological growth and gaps in the infrastructure still remain, which hold back the long -term growth capacity of the region.

Dive into the details of the plan:

• • The scheme targets a wide range of significant segments within the electronics manufacturing ecosystem, including performance and camera modules such as sub-assemblies, bare components such as non-SMD inactive components, electro-mechanical parts, multi-layer printed circuit boards and li-ion cells.
  • Additionally, it offers a high -density interconnect and SMD passive components such as hybrid (combination of both turnover and capital) for specific bare components such as specific bare components.
  • To pursue the region, the scheme provides capital expenditure incentives for parts and components involved in the production of these sub-government and bare components, which promotes more integrated and competitive manufacturing ecosystems.

The unique proposal of the scheme is a mixture of a turnover-based/capital-linked/hybrid (both turnover and capital) subsidy model, which has taken inspiration from traditional initiatives such as M-SIP and glasses. This innovative approach aims to attract more and more investment and cultivate a strong manufacturing ecosystem not only for production/turnover but also offering encouragement for capital expenditure.

By connecting subsidies to the capital investment made by companies, this model encourages investment in advanced technologies and infrastructure. In doing so, it helps Indian manufacturers to be more competitive on the global platform, running long -term development and innovation within the field.

While the detailed guidelines of the scheme are awaited, it is expected that unlike other central government incentive schemes, the scheme is expected to offer additional incentives to emphasize employment and to meet employment criteria to encourage employment generations in the country.

In addition, it is expected that the turnover incentive for the sub-government category can be up to 5%; And the category for bare components can be up to 10%, so that the part of the disabled due to high manufacturing costs in India can be compensated. Also the Capex incentive is likely to be 25% (MSIPS and Spects have been provided in the scheme). Furthermore, given that it is an expansion of earlier plans, it is likely that the benefits under this scheme will only be available for investment not considered to encourage in earlier schemes.

In India, the growth of electronics industry is not less than notable, in which domestic production of electronic goods is increasing 1.90 lakh crores in financial year 2014-15 In the financial year 2023-24, 9.52 lakh crore, a mixed annual growth rate (CAGR) of more than 17%is increasing. Exports have also increased, which is increasing 0.38 lakh crore in financial year 2014-15 In the financial year 2023-24, 2.41 lakh crores reflect CAGR of more than 20%. The scheme is ready to further enhance this speed by strengthening India’s electronics supply chain and promoting maximum value in the entire region.

– Author; Saurabh Aggarwal and Parul Nagpal are tax participants in EY India. Thoughts are personal.