Solutionbuggy Team
Nov 29, 2024
IT Ministry Targets Electronics Sector Growth with Rs 40,000 Cr Package; Seeks Cabinet Approval to Drive Manufacturing, Innovation, and Job Creation
Overview
The Ministry of Electronics and Information Technology (MeitY) plans to propose a ₹40,000 crore financial package to the Union Cabinet in December 2024, aiming to strengthen domestic manufacturing of electronic components. The initiative is set to include production-linked incentives (PLI) and capital expenditure subsidies, focusing on job creation and boosting India’s integration into the global electronics value chain.
Rising Demand and Ecosystem Goals
India's demand for electronic components is projected to grow from $45.5 billion in 2023 to $240 billion by 2030, according to the Confederation of Indian Industry (CII). The proposed scheme aims to increase local value addition in electronics manufacturing from the current 15–18% to 35–40% over five years, eventually targeting 50%.
The package excludes semiconductors, focusing instead on essential components like printed circuit boards (PCBs), camera modules, lithium-ion cells, display sub-assemblies, and mechanical parts. These items form roughly 50% of the material costs for devices such as smartphones and laptops.
Investment Potential and Strategic Planning
If approved, the scheme could attract investments worth ₹82,000 crore, enabling the production of components valued between ₹1.9–2.0 lakh crore. Officials are fine-tuning details to ensure timely execution, with investments expected to commence by April 2025. Discussions are ongoing regarding the type of incentives to offer, balancing operational subsidies and capital investment support to maximize industry participation.
The government has emphasized minimizing delays seen in earlier PLI initiatives and ensuring smoother onboarding of manufacturing facilities. Lessons learned from the recently concluded Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) have guided the development of this proposal.
Collaboration with International Partners
The government is expediting approvals for joint ventures with global players, including those from Taiwan, South Korea, Japan, and China, to bring in advanced technologies. Several brands in the smartphone and IT hardware sectors are actively working to involve their supply chain partners through technology transfers or joint ventures.
Addressing Industry Concerns
While the scheme builds on India’s success in assembling electronic products, industry stakeholders have raised concerns about achieving employment targets in an increasingly automated sector. The government is working to strike a balance between incentivizing manufacturing and creating jobs.
Broader Vision
This initiative reflects India’s ambition to reduce its reliance on imports, expand local production capacity, and secure a prominent position in the global electronics supply chain. By fostering a robust domestic ecosystem for electronic components, the government aims to transform India into a key player in the global electronics manufacturing arena.
Conclusion
The ₹40,000 crore electronics manufacturing package reflects India’s commitment to building a self-reliant and globally competitive electronics ecosystem. By addressing the challenges of limited domestic value addition and dependence on imports, the initiative aims to establish India as a hub for electronic components. If implemented effectively, this scheme could drive significant economic growth, attract global investments, and solidify India's role in the global electronics value chain.
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