Cabinet Approves Production-Linked Incentives For Electronics Manufacturing Firms
Customers browse electronics at Vijay Sales in Mumbai, India (Photographer: Kuni Takahashi/Bloomberg)

Cabinet Approves Production-Linked Incentives For Electronics Manufacturing Firms

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The Union Cabinet has approved production-linked incentives worth Rs 40,995 crore for electronics manufacturing companies, to boost manufacturing of electronics products.

“Two long-term policy decisions have been taken to make India the hub of electronics manufacturing and medical electronics,” Union Communications Minister Ravi Shankar Prasad said.

Incentives will be linked to incremental sales and capital investment of the companies, he added.

Prasad hoped that India can generate manufacturing revenue potential of Rs 10 lakh crore by the year 2025.

The minister said that incentive of 25 percent will be given on capital investment under the scheme.

In a statement, the Ministry of Electronics and Information Technology said that the scheme is aimed at boosting domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units.

“The scheme shall extend an incentive of 4 percent to 6 percent on incremental sales over base year of goods manufactured in India and covered under target segments, to eligible companies, for a period of five years subsequent to the base year as defined. Due to this the domestic value addition for mobile phones is expected to rise to 35 percent to 40 percent by 2025 from the current level of 2 percent to 25 percent,” it said.

The statement further said that the scheme has a potential to generate a total employment opportunity of about eight lakh, both direct and indirect.

The value of electronics produced in India, it said, has reached Rs 4,58,006 crore in 2018-19 from Rs 1,90,366 crore (At a compound annual growth rate (CAGR) of about 25 percent.)

India's share in global electronics manufacturing has grown almost 2.5 times in 6 years, from around 1.3 percent in 2012 to 3 percent in 2018.

The country's export of electronic goods also increased substantially from Rs 41,220 crore in 2017-18 to Rs 61,908 crore in 2018-19.

“As per industry estimates, electronics manufacturing has generated employment for over 20 lakh persons across the country,” the statement said.

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