TelecomLive April-2020

India as Electronics Hub Telecom LIVE April 2020 14 www.telecomlive.com years to set up their manufactur- ing units and will be offered 6 per cent incentive in the first two years, followed by 5 per cent in the next two years and then 4 per cent in the fifth year. PLI will be a mid-term stimulus to correct the manufacturing dis- ability that India faces in manu- facturing mobile devices in rela- tion to China and Vietnam. The higher incentive will help mobile players narrow down the large manufacturing disability in the manufacturing cost which ranges from 9 to 23 per cent in these countries. The move will give a push to Apple, which has been scouting for an alternative manufacturing hub beyond China. Apple already manufactures devices and compo- nents from India through its two vendors Foxconn and Wistron but the value is minimal at about $500 million. Even Samsung, which has moved its manufacturing hub from China and has invested multi- billion dollars to set up mega plants in Vietnam, is likely to gain from the latest decision. The company has invested Rs 5,000 crore in a new plant near Delhi with a peak capacity to man- ufacture 120 million phones per annum. It has also committed that 30 per cent of the capacity can be used for exports as long as the country's polices are conducive. The move to offer incentives will also help domestic players including Lava, Micromax and Karbonn, which invest in manu- facturing mobile handsets. The manufacturing of mobile handsets, which has been a top priority of the government, is a focus area of the National Policy on Electronics 2019 with a target of 1 billion mobile handsets by 2025, valued at $190 billion, including 600 million mobile handsets for export. Under SPECS, the government will provide financial incentive of 25 per cent on capital expenditure for machinery, research and development, electronic compo- nents, semi- conductor / display fabrica- tion units, telecom equip- ment, special- ised sub- assemblies and capital goods for manufac- turing of such products. The scheme will be applicable to investments in new units and expansion of capacity / modernisation and diversification of existing units. EMC 2.0 will provide infra- structure with minimum area of 200 acres along with industry specific facilities like common facility centres, ready built factory sheds/ plug and play facilities. It will offer financial assistance up to 50 per cent of the project cost subject to an upper limit of Rs 70 crore per 100 acres of land for setting up of Electronics Manufac- turing Cluster projects. For common facility centres (CFC), financial assistance of 75 per cent of the project cost, sub- ject to a ceiling of Rs 75 crore will be provided. This scheme expects T he government has cleared three schemes involving a total incentive of around Rs 48,000 crore to boost electronics manufacturing in the country. The schemes are expected to generate manufactur- ing revenue potential of Rs 10 lakh crore and create direct and indi- rect jobs for 20 lakh people by 2025. The approved schemes are: 1) Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing, 2) Modified Electronics Manufactur- ing Clusters (EMC 2.0) Scheme, and 3) Scheme for Promotion of manufacturing of Electronic Com- ponents and Semiconductors (SPECS). The move may encourage global mobile device manufacturers such as the US-based Apple and South Korean major Samsung to make India one of their global hubs for exports. Under the PLI scheme, electronics manufacturers will be offered incentives ranging from 4 to 6 per cent on their incremental sales of goods manufactured in India for a period of five years. The PLI scheme will replace the current Merchant Export from India Scheme (MEIS), which was challenged at the World Trade Organization (WTO) and declared void in October 2019. The new scheme is WTO-compliant as it targets production of phones made by or for foreign players which have a manufacturing value of at least $200. Under the MEIS scheme, the incentive was reduced to only 2 per cent for all sectors and to 4 per cent for a three-month period ending March 31, 2020 for mobile devices. Under the new scheme, foreign companies have to invest at least Rs 1,000 crore in the next four India as Electronics Hub Govt approves three schemes to boost manufacturing