RSM India

Newsflash on Schemes Notified by Government for Electronics Manufacturing Companies

In order to achieve vision of the National Policy on Electronics (NPE) 2019 and to create a level playing field for the domestic electronics manufacturer with the incentives comparable with those offered in other countries, the Ministry of Electronics And Information Technology (‘MeitY’) has notified the following schemes:

1.    Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS)-  The SPECS incentives are applicable to investments in new units as well as expansion of capacity/ modernization and diversification of existing units.  An eligible entity can avail financial incentive of 25% on prescribed capital expenditure incurred in relation to specified electronic components/ semiconductors, over a period of 5 years.  The applicants shall also be eligible to take benefit under any other scheme(s) of Government of India and vice-versa. However, investments committed by the applicants under M-SIPS scheme for which incentives have been claimed will not qualify as eligible investments under SPECS scheme.

2.    Production Linked Incentive Scheme (PLI)- The PLI applies to target segments namely mobile phones and specified electronic components. Incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India shall be provided to eligible companies for a period of five 5 years subsequent to the base year. PLI shall provide support only to companies engaged in manufacturing and contract manufacturers as defined in the FDI Policy Circular of 2017.

3.    Modified Electronics Manufacturing Cluster Scheme (EMC)- Under Modified EMC, electronics manufacturing clusters would be established to create infrastructure with common facilities and amenities in EMC projects and upgrade the infrastructure in Industrial Estates / Parks / Areas as Common Facility Centre (CFC) for attracting investment in electronics manufacturing. The scope shall cover components that are need based and identified through a feasibility study report to be prepared by the Project Implementing Agency. The financial assistance for setting up Electronics Manufacturing Clusters (EMCs) shall be 50% of the project cost subject to a ceiling of INR 70 crore for every 100 acres of land with an overall ceiling of INR 350 crore per project. In case of setting up CFC, the incentive shall be 75% of the project cost subject to a ceiling of INR 75 crore.

In this regard, all the 3 schemes need to be analyzed to check if there are any benefits w.r.t. specific products/ business plans. we have tried to provide an overview of the schemes notified by the MeitY. Further, The overall incentive thresholds and timelines in relation to above schemes is on first come first serve basis and therefore if any of the scheme is considered beneficial, it is important to move quickly.

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