Government Contemplates Dedicated PLI for Electronics Component Manufacturing

MeitY Explores Proposal for Standalone Incentive Scheme

The Ministry of Electronics and Information Technology (MeitY) is actively considering the introduction of a distinct production-linked incentive (PLI) scheme for electronics component manufacturing, according to sources familiar with the matter. Discussions surrounding this proposal are anticipated to involve consultations between MeitY, the Ministry of Commerce and Industry, and NITI Aayog to evaluate the feasibility and structure of the proposed incentive initiative.

Industry Pushes for Separate PLI to Boost Self-Reliance

Numerous discussions between the government and industry stakeholders have prompted the need for a separate PLI dedicated to the local manufacturing of electronic components. Companies, including Dixon Technologies, have advocated for a unique PLI scheme to foster self-reliance across the entire electronics ecosystem value chain. Government officials revealed that this proposal aims to address the challenges posed by the existing promotion scheme for manufacturing electronic components and semiconductors (SPECS).

Addressing ‘One Size Fits All’ Approach

Industry representatives contend that a separate PLI scheme is imperative to address the government’s current ‘one size fits all’ approach under the SPECS scheme. The existing scheme lumps together various components, including capital goods, active and passive electronic elements, semiconductor wafers, and integrated chips, under a singular incentive structure. Industry executives argue that the diverse nature of electronic components, especially passive ones, requires tailored incentives to achieve the necessary scale.

Government Considering Extension of SPECS Scheme

While the Ministry of IT plans to engage in discussions with the Ministry of Commerce, reports suggest a lack of enthusiasm from the latter regarding additional PLI schemes. The decision holds significance as the current Rs 3,285 crore SPECS scheme is scheduled to conclude on March 31, 2024. A proposal to extend the scheme’s outlay to Rs 10,000 crore and prolong its duration by five years is also under consideration.

Crafting a Framework for the New PLI Scheme

The next steps involve collaborative discussions among MeitY, NITI Aayog, and industry stakeholders to assess the potential of the proposed PLI scheme. Establishing a framework to determine incentives and parameters for companies engaged in component manufacturing in India is crucial. Government officials emphasize the necessity of policy adjustments, seeking industry input to optimize the incentive framework.

Task Force Formed to Deliberate on Domestic Manufacturing

MeitY has formed a nine-member task force, including industry leaders like Ajai Chowdhry, Sanjay Nayak, Vivek Tyagi, Aman Gupta, and Sunil Vachani, to deliberate on electronic products and components suitable for domestic manufacturing. The task force aims to address current hardware manufacturing issues, discuss policy interventions, and establish timelines for issue resolution.

Government’s Ambitious Target for Electronics Manufacturing

With a target of achieving $300 billion in electronics manufacturing production by 2025-2026, the government remains committed to propelling the sector forward from its current $102 billion mark in FY23. The proposed PLI for electronics components aligns with this broader vision to bolster the country’s position in the global electronics manufacturing landscape.*

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