ELECTRONIC SYSTEMS

  • Expand all
SUMMARY
  • The electronics market of India is one of the largest in the world and is anticipated to reach USD 400 billion by 2020.
  • India ranks third among global startup ecosystems.
  • Several government driven initiatives and incentives like – Electronics Development Fund (EDF), Electronics Manufacturing Clusters (EMCs) scheme, Modified Special Incentive Package Scheme (M-SIPS).
  • 100% FDI is allowed through automatic route (49% through automatic route in strategic defence electronics sector).
REASONS TO INVEST
  • Indian market size is expected to reach USD 400 Billion by 2020.
  • Electronics System Design and Manufacturing Sector (ESDM) envisaged to achieve “Net Zero Imports” by 2020.
  • India ranks third among global startup ecosystems.
  • 65% of the current demand for electronic products is met by imports which presents an opportunity for import substitution.
  • Electronic Manufacturing Services (EMS) industry is expected to be a significant contributor to the entire industry’s development.
  • 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.
  • The government is promoting development of electronics manufacturing clusters throughout the country to provide world class infrastructure and facilities.
  • Electronics India B2B Platform, which helps various technology players to explore potential synergetic partners for technology transfer and joint ventures for electronics manufacturing
  • Major government initiatives like Digital India and Make in India and supportive policies including favourable FDI policies for electronics manufacturing.
  • The success of Government’s Digital India initiative can be evidenced from the growth in digital transactions by 300%, and over 197 crore documents being placed in the DigiLocker.
  • Huge domestic demand and rising disposable income. Also there is a huge consumption of electronics products in the Middle East and in emerging markets such as North Africa and Latin America.
  • Steps taken to decrease manufacturing and logistic costs would further proliferate India’s competitive advantage in the sector.
  • USD 15 billion market for Internet of Things (IoT) by 2020.
  • To give thrust to R&D and creation of an innovative ecosystem, Department of Electronics & Information Technology introduced “Visvesvarya PHD Scheme for Electronics and IT”.
  • Creation of a B2B platform to provide opportunity to PSUs and other private sector companies in areas of Electronic System Design and Manufacturing (ESDM).
  • Favourable government Policies :
    • Modified Special Incentive Package Scheme (M-SIPS)
    • Electronics Manufacturing Clusters Scheme (EMC).
    • Electronics Development Fund Policy (EDF).
    • Financial assistance for setting up of Electronics and ICT Academies.
    • Product Specific Initiatives such as Set Top Boxes, Aakash, low cost tablets etc.
STATISTICS
  • The sector comprises of Consumer Electronics, Industrial Electronic, Electronic Components, Strategic Electronics, Semiconductor Design and Electronic Manufacturing Services.
  • The electronics market of India is one of the largest in the world and is anticipated to reach USD 400 billion in 2020.
  • Investments in Electronic Manufacturing stood at INR 1.57 lakh crores in 2017, registering a growth rate of 27% over the year.
  • Mobile Phones, one of the dominant sub-sector, witnessed a jump of 60 % in volume terms, as manufacturing of mobile phones reached INR 17.5 crore units by 2016-17. India is home to 105 mobile/ancillary manufacturing units, providing employment to 4 lakh people directly.
  • 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)
FDI POLICY
  • 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.
SECTOR POLICY

National Policy on Electronics:

  • NPE’s vision is to create a globally competitive Electronics System Design and Manufacturing (ESDM) industry to meet the country’s needs as well as cater 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.
  • Building a strong supply chain of raw materials, parts and electronic components to raise indigenous availability to over 60% by 2020.
  • Increase exports in the ESDM sector to USD 80 billion by 2020.
  • Constitution of nine (9) Working Groups for prior sub-sectors:
    • Mobile Handsets and related parts/ components ecosystem
    • LED Products
    • Medical Electronics
    • Consumer Electronics and Appliances
    • Automotive Electronics (including Electric Vehicles)
    • Solar Photovoltaic
    • Fabless Chip Design
    • Electronic Manufacturing Services (EMS) including population of PCB
    • Components, Semiconductors, Displays, PCB, LED, Set Top Boxes, IT products, Telecom equipment, Lithium Ion Batteries, Strategic Electronics, Industrial Electronics, Others.

Preferential Market Access:

  • 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 5 years from the date of receipt of Initial application.
  • Incentive commitment of INR 10,000 crores.
FINANCIAL SUPPORT

Modified SIPS:

  • The M-SIPS scheme, developed to boost manufacturing and attract investments in the electronics sector, was modified in August 2015 by extending the scheme for five more years to 2020, and adding 15 new product categories
  • 182 M-SIPS applications worth USD 23.8 billion received between April 2014-December 2017, from Global OEMs/ODMs and component manufacturers in various segments of electronics like IT and telecom, strategic, energy conservation, consumer, automotive, industrial, medical and EMS
  • MEITY has approved 130 proposals worth USD 3.6 billion between April 2014- December 2017

Electronics Development Fund:

  • A Fund of funds to invest in professionally managed venture funds with an investment focus on Electronics, Nano-electronics and IT.
  • The objective of the policy is to support Daughter Funds including Early Stage Angel Funds and Venture Funds in the ESDM (Electronic System Design and Manufacturing) Sector.

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.
  • 20 Greenfield Electronic Manufacturing Clusters approved.

Export Incentives:

  • Export incentives 2-3% are available under the Merchandise Export from India Scheme (MEIS).This includes products such as AC parts and compressors, refrigerating equipment compressors, fully automatic washing machines, color TV and STB for accessing files.

STATE INCENTIVES:

Apart from the above incentives, India offers additional incentives for industrial projects, while some states offer separate policies for this sector.

  • Electronics Policy for the State of Gujarat (2014-19):

    • Assistance of up to 25% of the project cost to Greenfield EMCs, subject to a ceiling of INR 10 crores.
    • Special Incentive Package for two anchor units (with investment of more than INR 100 crores) in each of the Greenfield EMCs.
  • Electronics, IT and ITES Investment Policy of Chhattisgarh:

    • Electronics, IT and ITES units are entitled to an interest subsidy upto 75% of the total interest paid annually up to the period of 8 years with a maximum limit of INR 110 LPA. The subsidy is on a reimbursement basis.
    • Units established in the state shall be reimbursed 50% of the fixed capital investment, excluding the cost of the land, with maximum limit of Rs.150 lakh.

Support for International Patent Protection in E&IT-II”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.

KEY POINTS IN UNION BUDGET 2018-19:

  • Ministry of Electronics & Information Technology has been allocated INR 6000 crores under Union Budget 2018-19, an increase of 48% as compared to the allocations made in 2017-18.
  • The revenue expenditure allocated under budget 2018-19 is INR 5675 crores, and capital expenditure allocation stands at INR 325 crores.
INVESTMENT OPPORTUNITIES
  • Semiconductor Wafer Fabrication (FAB).
  • Electronic Components.
  • Strategic electronics
  • Semiconductor Design.
  • Electronics Manufacturing Services (EMS).
  • Telecom products.
  • Industrial/ Consumer electronics.
FOREIGN INVESTORS
  • Qualcomm (USA)
  • Samsung (South Korea)
  • LG (South Korea)
  • GE (USA)
  • Jabil (USA)
  • Flextronics (USA)
  • Bosch (Germany)
  • Amphenol (USA)
  • Motherson Sumi system (Japan)
  • Nidec (Japan)
  • Magneti Marelli (Italy)
  • Continental (Germany)
  • HMC MM (Japan)
  • Delphi (USA)
  • Mando Hella (South Korea)
  • Mitsubishi (Japan)
  • Harman (USA)
  • Perto (Brazil)
  • Giesecke and Deverient (Germany)
  • Haier (China)
  • Philips (Netherland)
  • Liebherr Hausgerate (Germany)
  • M2i (Taiwan)
  • Asti (Japan)
  • Panasonic (Japan)
  • Huawei (China)
SOURCES
  • Print

Related Posts:
Load more