The scheme aims to develop a robust component ecosystem, domestic value addition, and integrate Indian companies with global value chains.
Salient Features of the Scheme
- It will provide differentiated incentives to Indian manufacturers tailored to overcome specific disabilities for various categories of components.
- The targeted segments will include sub-assemblies (Display and camera module), Bare components like Non-Surface Mount Devices, etc.
- Tenure: 6 years with one year gestation period.
- Payout of a part of the incentive is linked with employment targets achievement.
Importance of Electronic Sector
- Strategic:
- National Security: India’s first ever national security semiconductor fabrication plant will be set up under India-US joint cooperation to produce chips for military hardware.
- Supply Chain resilience: Over half of India’s import ($89.8 bn in FY23) comes from China and Hong Kong, highlighting the need for diversification and building domestic manufacturing capacities.
- Economic:
- Export Growth: It rose from 0.38 lakh crores (FY14-15) to 2.41 lakh crores (FY23-24) with a compound annual growth rate (CAGR) of more than 20%.
- Domestic Production Growth: It increased from 1.9 lakh crores (FY14-15) to 9.52 lakh crores (FY23-24) with a CAGR of more than 17%.
