IT Ministry Likely To Rollout ₹40,000 cr Electronics Package

The IT ministry is set to seek approval from the Union Cabinet next month to rollout the proposed ₹40,000 crore package aimed at localising electronics manufacturing, Economics Times reported.

The package aims at transforming the electronics industry by providing subsidies on capital expenditure while also laying stress on employment generation. This doesn't cover semiconductor industries.

A source told ET, “After numerous consultations with stakeholders, MeitY is ready with the Cabinet note which will be sent to the Cabinet in December.”

It added, “If it is approved by the government with no objections, the industry will have a 90-day window to prepare to start investments by April 2025.”

A government official said, “There is still some final discussion going on. Our aim is to get all the approvals, including the Union Cabinet’s, sometime in December so that we are ready to roll out the plan on April 1.”

By 2030, India’s demand for electronic components will clock at $240 billion from $45.5 billion in 2023, buoyed by increasing local production of mobile phones, a Confederation of Indian Industry report highlighted. The government is set to increase local value addition by 35%-40%, thereby increasing it to 50% in the near future (excludes semiconductor industries)

The scheme is to see investments to the tune of ₹82,000 crore with a target to manufacture components worth between Rs 1.9-2.0 lakh crore during the scheme’s tenure.

A source said, “There are some final discussions around what shape the support will take, whether it will be in the form of capital subsidies, or incentives on operational expenditure, or both. There is also a question of linking incentives to employment.”

It added, “The ministry is ensuring there is no pushback from the industry after the scheme is announced, like in the case of the IT hardware PLI scheme.”

Notably, components of batteries, camera modules, mechanicals, displays, and PCBs are on top priority. In 2022, these products accounted for about 43% of the total demand as they are expected to be valued at $51.6 billion by 2030.