Union Cabinet's Incentive Scheme for Electronic Components
The Union Cabinet has approved a Rs 22,919 crore incentive scheme for the manufacture of electronic components over six years. This initiative aims to enhance India’s role in global value chains and increase domestic value addition.
Objectives and Expectations
- Job Creation: The scheme is expected to generate approximately 91,600 direct jobs.
- Production and Investment: It aims to produce Rs 4.56 lakh crore and attract an incremental investment of Rs 59,350 crore.
- Target Components: Includes display modules, camera modules, and PCB assemblies among others, used in smartphones, laptops, and home appliances.
Strategic Shift
The scheme encourages moving from import substitution to export-led promotion, targeting a growth in electronics manufacturing from $120 billion to $500 billion.
Differentiation from PLI Scheme
- Incentives are linked to employment generation, capital expenditure, and production levels.
Sectoral Significance
- Electronics is one of India’s top exports, valued at Rs 2.5 lakh crore, expected to double in four years.
Challenges and Demand-Supply Gap
- Identified a $100 billion domestic demand-supply gap, with potential $140 billion if exporting.
- Electronic components production in 2022-23 was $10.75 billion.
- Key challenges include:
- Lack of domestic scale.
- High investment to turnover ratio.
- High domestic demand and import reliance.
- Component demand projected to reach $160 billion by 2028-29.
Despite reduced finished product imports due to the PLI scheme for smartphones, key component imports increased from $29 billion in FY21 to $46.5 billion in FY23.
