In Short:
The budget announced employment-linked incentive schemes aiming to boost the electronics manufacturing industry in India, creating a surge of new jobs. Industry executives seek clarity on whether benefits will extend to contractual employees. The schemes support first-time employees and bulk hiring, with projections of creating millions of direct jobs by 2030 and requiring additional investments. An Niti Ayog report estimates substantial growth in the industry by 2030.
Employment-Linked Incentive Schemes to Boost Electronics Manufacturing in India
New Delhi: Industry executives believe that the employment-linked incentive schemes announced in the budget will significantly impact the $500-billion electronics manufacturing ecosystem targeted by 2030 in India. However, they are seeking clarity on whether the benefits will extend to contractual employees, as many original equipment makers (OEMs) hire employees through third-party staffing firms.
Positive Impact on Job Creation
According to Rajoo Goel, the secretary general of Electronics Industries Association of India (ELCINA), domestic manufacturing capacities are expected to increase significantly in the coming years, creating 1 million new direct jobs by 2026 and up to 5 million by 2030. ELCINA estimates that an additional USD 36 billion in investments will be required by 2030.
Finance minister Nirmala Sitharaman announced three new employment-linked incentive schemes in her budget speech, aimed at recognizing first-time employees and supporting both employees and employers.
Details of the Schemes
Scheme B, designed for bulk hiring of first-timers in manufacturing, will support 3 million beneficiaries over two years with a Rs 52,000 crore outlay. Employers hiring 50 workers or 25% more than the previous year will receive 8-24% of the wage as an incentive, shared equally between the employer and the employee.
Sumit Kumar, chief strategy officer at staffing firm Teamlease, believes that the budget allocations will not only drive industry growth but also help achieve the $500 billion target in electronics manufacturing by 2030, potentially creating 5.5-6 million direct jobs within the same period.
Industry Growth Projections
According to a report by Niti Ayog, the electronics manufacturing industry is expected to produce $350 billion worth of finished goods, supported by a $150 billion component manufacturing ecosystem by 2030. The industry association India Cellular and Electronics Association (ICEA) estimates a need for 4-5 million new employees by 2030 to support the growing ecosystem.
However, industry executives have highlighted a concern regarding the employment of contractual workers under the new schemes. They emphasize a need for further clarity and details to be ironed out before the schemes are implemented from October.
