Summary:

The Finance Ministry has approved an incentive program of Rs. 25,000 crore (US$ 2.92 billion) to encourage domestic production of electronic components. The proposal, expected to receive cabinet approval later this month, will be implemented in April. Over the next five to six years, it aims to generate Rs. 4,28,000-5,13,600 crore (US$ 50-60 billion) in electronics components. Initial negotiations proposed a Rs. 30,000-40,000 crore budget, but the final figure was reduced based on industry estimates.

The new scheme offers incentives based on manufacturing constraints and localisation. Products that face greater manufacturing challenges than countries like China or Vietnam will receive higher incentives. Unlike the smartphone PLI program, it focuses on capital-intensive components and subassemblies that require significant investment. The domestic electronics sector seeks lower customs duties on smartphone components, arguing that high duties diminish the benefits of the incentives. By 2030, India’s demand for electronic components is expected to exceed Rs. 20,54,400 crore, with a target of 35-40% local value addition.

Source: IBEF

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