New Delhi: An incentive scheme for local manufacturing of a range of electronic components from smartphone displays to battery cells to camera modules was notified on Tuesday by the central government, giving a fillip to manufacturers looking to boost domestic capacity through greenfield or brownfield investments.
The Electronics Component Manufacturing Scheme (ECMS) will start accepting applications from industry stakeholders within the next three weeks, following a brief consultation period on how the scheme will be made accessible to the industry, Union IT minister Ashwini Vaishnaw said at a media briefing on Tuesday.
The ₹22,919 crore or $2.7 billion scheme from the ministry of electronics and information technology (Meity) will offer incentives of up to 10% of turnover and up to 25% of capital expenditure in setting up electronics components manufacturing in the country. The incentives will become applicable from this fiscal itself.
Incentives on offer include up to 4% on ₹250 crore investment over six years in display modules; 5% for the first year on ₹250 crore investment over six years in camera modules; up to 10% on ₹50 crore investment over six years in printed circuit board (PCB) manufacturing; up to 6% on ₹500 crore investment over six years in battery cells for smartphones; hybrid subsidies of 8% of turnover and 25% of capital expenditure in flexible PCBs; up to 25% on ₹10 crore investment in equipment for component manufacturing, and more.
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Further, as part of the incentives outlay, Meity seeks to generate over 90,000 direct jobs in six years through applicants of the scheme. Up to 5% of the incentives will depend on the applicants meeting this job criteria.
Overall, there are 11 categories of components that have been selected for the incentives. Applications will open on 1 May, and remain open for three months for all components, and two years for component manufacturing equipment and machinery.
As more components start being made in India, Vaishnaw said that the scheme holds potential to make gadgets less expensive in the country. As part of domestic value addition, devices will start generating increasing margins—giving brands room to pass on the cost benefit to customers.
The effect of the scheme could be akin to how Apple, thanks to lower import taxes until US President Donald Trump’s trade tariffs announced on 2 April, has managed to sell its iPhones at a lower price in the US in comparison with other geographies such as India. Vaishnaw, however, said that the objective is bigger than that.
“In India, the highest domestic value addition today is to the tune of 20%. Within the ambit of the next five years, India should be able to achieve double the value addition and step up to the highest level in global geographies,” the minister said.
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Vaishnaw also added that Meity is not looking at the electronics localization scheme “as an import substitution opportunity. Rather, we are looking at it purely from an export opportunity, which in turn will generate greater value for India’s electronics manufacturing firms”.
“In FY25, smartphone exports crossed ₹2 trillion, making smartphones the top exported goods out of India,” the minister added. “This marks a 54% growth over FY24, out of which iPhone exports were alone worth ₹1.5 trillion. Over the past decade, electronics production has grown 5x—at a CAGR of over 17%. Exports have increased over 6x, at a CAGR of over 20%.”
To be sure, industry stakeholders have been clamouring for the Centre to offer a framework to expedite the impact of localizing components. On Monday, Mint reported that the Centre was looking at various frameworks to speed up the process for engineering operations to ramp up local components manufacturing.
Ankush Wadhera, partner and managing director at consultancy firm Boston Consulting Group (BCG) India, said the incentives layout will offer “a much-needed boost for domestic value addition, in an industry that has so far welcomed electronics assembly and the semiconductor ecosystem”.
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“The move will help players set-up components manufacturing facilities in India in key areas such as high-end PCBs, thereby reducing our nation’s reliance on imports which will be key in shoring up India’s importance in the global electronics supply chain,” he said.
