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Thursday, June 20, 2024

Electronics firms push for Rs 35,000-crore incentive plan for components

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In Short:

The electronics manufacturing industry is asking the government for a Rs 30,000-Rs 35,000 crore production-linked incentive (PLI) scheme to support surging exports of mobile phones and other electronics. The India Cellular & Electronics Association (ICEA) wants to boost domestic value addition in mobile phone manufacturing to 35-40% and develop an indigenous semiconductor ecosystem. The industry is seeking PLI support for companies investing Rs 1,000 crore or more in component manufacturing.


Electronics Manufacturing Industry Seeks Rs 30,000-35,000 Crore PLI Scheme

The electronics manufacturing industry is urging the government to introduce a production-linked incentive (PLI) scheme worth Rs 30,000-Rs 35,000 crore for components and sub-assemblies. This initiative aims to support the increasing exports of mobile phones and other electronics.

Industry Body’s Statement

The India Cellular & Electronics Association (ICEA), representing top smartphone brands and manufacturing companies, stated that the incentive scheme is crucial to meet the growing demand for electronics components, projected to reach $75-$80 billion by 2026 and $300 billion by 2032. This support is essential to achieve $300 billion worth of electronics products manufacturing by 2026 and $1.2 trillion by 2032.

The primary objective of the scheme is to enhance domestic value addition, particularly in mobile phone manufacturing, aiming to raise it to 35-40% from the current 18%. ICEA emphasized the need for component manufacturing to align with the ongoing development of the semiconductor ecosystem in India.

Plans for Component Ecosystem

The industry body highlighted that the component ecosystem would require 2-3 years to commence commercial production. Once operational, domestic manufacturing of components is expected to cater to 5-10% of global demand within 6-7 years. ICEA also suggested inviting international firms to participate in the domestic and global component manufacturing market.

Key Recommendations

In its submission to the Ministry of Electronics and Information Technology, the industry proposed a 4-6% incentive structure under the PLI scheme for manufacturing sub-assemblies, high-end printed circuit boards, and various components. ICEA recommended a PLI plan for eight years, allowing companies to claim incentives for six years during the tenure.

Additionally, the industry body suggested supporting companies with significant investments in SMD passive components, lithium-ion cells, and high-end PCBs by providing 40% capex support. Supply chain ancillary units were also recommended to receive 25% capex support for their operations.

Conclusion

ICEA emphasized the importance of scale and trust in the ecosystem, praising the collaborative efforts of the government and industry in rolling out an effective stimulus for components and sub-assemblies. The industry is optimistic about the potential impact of the proposed PLI scheme on enhancing domestic manufacturing capabilities and meeting global demand in the future.

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