BENGALURU — The IT ministry is looking to create a $400 billion electronics manufacturing industry by 2025 with mobile devices segment accounting for three-fourths of the production, according to the draft electronics policy.

The Ministry of Electronics and Information Technology (MeitY) has come out with the draft notification of ‘National Policy on Electronics 2018’ (NPE 2018) for the Electronics System Design and Manufacturing (ESDM) Sector of India on Wednesday.

MeitY said that it will coordinate with the Ministries and Departments concerned to provide incentives to the industry for rapid and robust expansion of electronics hardware manufacturing within the country.

"Promote domestic manufacturing in the entire value-chain of ESDM (electronic system design and manufacturing) for economic development to achieve a turnover of $400 billion by 2025," the draft proposes.

The proposed policy aims to double target of mobile phone production from 500 million units in 2019 to 1 billion by 2025 to meet the objective. "This ($400 billion turnover) shall include targeted production of 1.0 billion mobile handsets by 2025, valued at $190 billion (approximately Rs13 lakh crore), including 600 million mobile handsets valued at $110 Billion (approximately Rs7 lakh crore) for export," the draft said.

According to the draft, the government plans to end modified special incentive scheme with schemes that it will find easier to implement such as interest subsidy and credit default guarantee etc.

Modified Special Incentive Package scheme (M-SIPS) was launched in 2012 which provided for capital subsidy of 25 per cent for electronics Industry located in non-SEZ area and 20 per cent for those in SEZ areas.

As on September 30, 2018, 265 applications with proposed investment of $9 billion have been received under M-SIPS, out of which 188 applications with proposed investment of $6 billion have been approved and investment of $1.2 billion has been made by 139 applicants, the draft said.

The current NPE in place had proposed creation of 200 electronic manufacturing clusters (EMCs) by 2020 that will house entire ecosystem for development and production of specific category of products.

According to the draft, 20 greenfield EMCs and three brownfield EMC projects have been sanctioned with the project outlay of $550 million including $225 million from the government.

The policy proposes to push development of core competencies in all the sub-sectors of electronics including electronic components and semiconductors, defence electronics, automotive electronics, industrial electronics, strategic electronics etc.

The draft proposes suitable direct tax benefits, including inter-alia investment-linked deduction under Income Tax Act for electronics manufacturing sector, for setting up of a new manufacturing unit or expansion of an existing unit.

The proposal includes increasing tax benefits on expenditure incurred on R&D, enhancing rate of duty drawback for electronics sector, reimbursement of State levies and other levies for which input tax credit is not available, allowing duty free import of second-hand capital goods for electronics hardware manufacturing, etc.

— Sufia Tippu is a freelance tech journalist based in India contributing to EE Times India