- The electronics market of India is one of the largest in the world and is anticipated to reach USD 400 billion by 2020
- India has the 4th Largest Startup the ecosystem in the world
- Several government driven initiatives and incentives like – Electronics Development Fund (EDF), Electronics Manufacturing Clusters (EMCs)
scheme, National Knowledge Network & National Optical Fiber Network
- India has a large pool of skilled manpower, and has the third largest pool of scientists and technicians in the world
- Strong design and R&D capabilities in auto electronics and industrial electronics
- 65% of the current demand for electronic products is met by imports which present an opportunity for import substitution
- Expected market size for major electrics sub-sectors in India by 2020:
- Telecom Equipment (USD 34 Billion)
- Laptops, Desktops, Tablets (USD 34 Billion)
- LED (USD 35 Billion)
- Consumer Electronics (USD 29 Billion)
- Set Top Boxes (USD 10 Billion)
- Automotive Electronics (USD 10 Billion)
- Medical Electronics (USD 8.5 Billion)
- 100% Foreign Direct Investment (FDI) is allowed under the automatic route in the ESDM sector and is subject to all applicable regulations and laws
- In case of electronics items for defence, FDI up to 49% is allowed under automatic route, whereas anything above 49% is allowed through the government approval
National Policy On Electronics (NPE):
- NPE’s vision is to create a globally competitive Electronics System Design and Manufacturing (ESDM) industry to meet the country’s needs and serve the international market
- Develop an ecosystem for a globally competitive ESDM sector in the country by attracting investment in excess of USD 100 Billion and generating employment for 28 Million people at various levels
- To develop core competencies in strategic and core infrastructure sectors like telecommunications, automobile, avionics, industrial, medical, solar, information and broadcasting, railways, intelligent transport systems, etc.
- A number of state governments have also come up with separate state specific policies for electronics sector
Preferential Market Access:
- Preference to domestically manufactured electronic products in Government procurement
- Nine (9) electronic products and twenty three (23) telecom products are notified under the policy
- All companies registered in India engaged in manufacturing of electronic products in India and the sole selling agents/authorised distributors/authorised dealers/authorised supply houses of the domestic manufacturers of electronic products are eligible for consideration under the Policy
- The electronic products to be notified under this policy shall meet the minimum 25% domestic value-addition in terms of Bill of Material (BoM) from domestic manufacturers
Information Technology Investment Regions (ITIR):
- Karnataka (42.5 sq. km, near Bengaluru, a USD 17.6 Billion investment)
- Telangana (202 sq. km, near Hyderabad, USD 36.4 Billion investment)
- Semiconductor Wafer Fabrication (FAB) manufacturing facilities being set up in India in Uttar Pradesh and Gujarat with a total investment of USD 10.5 Billion
Electronic Sector Skills Council and Telecom Sector Skills Council have been set up for establishing an effective and efficient ecosystem for developing and imparting outcome-oriented skills for the ESDM sector. A total of 0.09 million people are to be supported under the Skill Development Scheme in six different states.
Provisions of the Union Budget 2016-2017:
- Extension of differential excise duty dispensation made available to mobile handsets/ tablet computers to specified electronic equipment: The differential excise duty dispensation made available to mobile handsets/tablet computers has been extended to the following electronic equipment. However, these will be charged excise duty of 4% (without input tax credit) while Countervailing Duty (CVD) on imports shall be 12.5%.
- Broadband modems
- Set-top boxes for gaining access to internet
- Set-top boxes for TV
- Digital Video Recorder (DVR) / Network Video Recorder (NVR)
- CCTV Camera / IP Camera
- Lithium-ion batteries (other than those for mobile handsets including cellular phones)
- Mobile Handsets: To promote domestic value addition in mobile handsets, Countervailing Duty/Excise duty exemption has been withdrawn on charger or adapter, battery, and wired headsets for manufacture of mobile handsets while excise duty structure on these items for supply to mobile handset manufacturers has been changed. These will be charged an excise duty of 2% (without input tax credit) while CVD on imports shall be 12.5%. To enable this, inputs, parts and sub-parts for the manufacture of these goods have also been exempted from BCD (Basics Customs Duty), CVD/Excise duty and Special Additional Duty (SAD).
- Semiconductor wafer fabrication/LCD fabrication and ATMP units: BCD and SAD have been exempted on machinery, electrical equipment, other instruments and their parts (except populated Printed Circuit Boards) for use in semiconductor wafer fabrication/LCD fabrication and Assembly, Test, Marking and Packaging of semiconductor chips (ATMP) units.
- Capacitor grade polypropylene granules: BCD on capacitor grade polypropylene granules or resins for the manufacture of capacitor grade plastic film has been exempted.
- Magnetron for microwave ovens: BCD has been exempted on magnetron of up to 1.5KW used for the manufacture of domestic microwave ovens.
- Sub-miniature fuses, micro fuses, resettable fuses and thermal fuses: BCD has been exempted on specified raw materials and capital goods for use in manufacture of sub-miniature fuses, micro fuses, resettable fuses and thermal fuses.
- Brushless Direct Current (BLDC) electric motors: BCD on Neodymium Magnet (before Magnetization) and Magnet Resin (Strontium Ferrite compound before formed/before magnetization) for use in manufacture of Brushless Direct Current (BLDC) motors has been reduced from 7.5%/10% to 2.5%.
- Simplification of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules: The existing Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 has been substituted with the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016 with a view to simplify things, including allowing duty exemptions to importer/manufacturer based on self-declaration instead of obtaining permissions from the Central Excise authorities. Need for additional registration has also been done away with.
- Capital subsidy up to 20-25% for 10 years on capital expenditure
- Reimbursement of CVD/excise for capital equipment in non-SEZ units
- Available for the entire value chain of electronics products under 44 verticals
- Incentives available for 10 years from the date of receipt of Initial application
Electronics Development Fund:
- A Fund of funds to invest in professionally managed venture funds with an investment focus on Electronics, Nano-electronics and IT
- EDF to take minority stake in the venture funds
- Available for approval of new Daughter Funds up to 31.03.2017
Electronic manufacturing clusters (EMC):
- Provide support for creation of world-class infrastructure
- The assistance for the projects in Greenfield Electronics Manufacturing Clusters is restricted to 50% of the project cost subject to a ceiling of USD 7.69 million for every 100 acres of land
- For Brownfield EMC 75% of the cost of infrastructure, subjected to a ceiling of USD 7.69 million is provided as Grant
- Scheme is open for receiving applications for a period of five years from the date of notification
- 44 applications from 18 states involving more than 7000 acres of land at various stages
- Export incentives 2-3% are available under the Merchandise Export from India Scheme (MEIS)
Areas based Incentives:
- Incentives for units in SEZ/NIMZ as specified in respective acts or the setting up of projects in special areas such as the North-East, Jammu & Kashmir, Himachal Pradesh & Uttarakhand
- For compliance of electronic goods with Indian Standards, both testing and certification are required for exports
- Apart from the above incentives, India offers additional incentives for industrial projects, while some states offer separate policies for this sector
Support for International Patent Protection in E&IT-II and SIP-EIT-II:
- To provide support to MSMEs and Start-ups trying to secure intellectual property rights on a global level and establish competitive advantage
- Reimbursement is limited to a total of USD 23076.92 per invention or 50% of the total expenses incurred in filing and processing of patent application up to grant whichever is lesser
The following duty exemptions are available for promotion of manufacturing of solar PV cells/modules:
- Customs Duty Exemption for import of raw material for use in manufacture of EVA Sheet or back sheet which are used in manufacture of Solar Photo Voltaic Cells or modules
- Customs Duty Exemption for import of flat copper wire for use in manufacture of Photo voltaic ribbon (tinned copper interconnect) for the manufacture of solar photovoltaic cells or modules
- Central Excise Duty Exemption for purchase of raw material for use in manufacture of EVA sheet or back sheet which are used in manufacture of solar photovoltaic cells or modules
- Central Excise Duty Exemption for purchase of flat copper wire/round copper and tin alloy wire for use in manufacture of photo voltaic ribbon (tinned copper interconnect) for the manufacture of solar photo voltaic cells or modules
- Central Excise Duty Exemption for selling EVA sheets or back sheets for use in the manufacture of solar photo voltaic cells or modules
- Manufacturers Association for Information Technology
- Electronic Industries Association of India
- Consumer Electronics and Appliances Manufacturers Association
- India Electronics Semiconductor Association
- Indian Electrical & Electronics Manufacturers Association
- Automotive Component Manufacturers Association of India
- Association of Indian Medical Device Industry