News Excerpt
The Union Cabinet chaired by the Prime Minister has approved financial assistance to the Modified Electronics Manufacturing Clusters (EMC2.0) Scheme for development of world class infrastructure along with common facilities and amenities through Electronics Manufacturing Clusters (EMCs).

•    Ministry of Electronics and Information Technology (MeitY) notified Electronics Manufacturing Clusters (EMC) Scheme to build and create requisite infrastructure ecosystem for electronics manufacturing in 2017.  
•    A period of 5 years (i.e. upto 2022) is available for disbursement of funds for the approved projects.  Under EMC scheme, 20 Greenfield EMCs and 3 Common Facility Centres (CFCs) measuring an area of 3565 acres have been approved in 15 states across the country.
•    There is a need for continuation of such scheme in modified form for further strengthening the infrastructure base for electronics industry in the country and deepening the electronics value chain.
•    India’s electronics production has increased from Rs. 1,90,366 crore (US$29 billion) in 2014-15 to Rs. 4,58,006 (US$ 70 billion) in 2018-19, at a Compound Annual Growth Rate (CAGR) of about 25%.  
•    India’s share in global electronics manufacturing grew from 1.3% (2012) to 3.0% (2018).  It accounts for 2.3% of India’s GDP at present.

    The Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme would support setting up of both Electronics Manufacturing Clusters (EMCs) and Common Facility Centers (CFCs).
    For the purpose of this Scheme, an EMC would set up in geographical areas of certain minimum extent, preferably contiguous, where the focus is on development of basic infrastructure, amenities and other common facilities for the ESDM (Electronic system design and manufacturing) units.
    For Common Facility Centre (CFC), there should be a significant number of existing ESDM units located in the area and the focus is on upgrading common technical infrastructure and providing common facilities for the ESDM units in such EMCs, Industrial Areas/Parks/industrial corridors.
    The total outlay of the propose EMC 2.0 Scheme is Rs. 3,762.25 crore over a period of eight years.
    The Scheme will create a robust infrastructure base for electronic industry to attract flow of investment in ESDM sector and lead to greater employment opportunities.  Following are the expected outputs/outcomes for the Scheme:
o    Availability of ready infrastructure and Plug & Play facility for attracting investment in electronics sector
o    New investment in electronics sector
o    Jobs created by the manufacturing units;
o    Revenue in the form of taxes paid by the manufacturing units
    These EMCs would help development of entrepreneurial ecosystem, drive innovation and catalyse the economic growth of the region by attracting investments in the sector, increasing employment opportunities and tax revenues.

    India's electronics production is estimated at Rs 4.58 trillion in 2018-19, which despite accelerated growth in recent years, still represents only 3.3 per cent share of the global market.
    The domestic electronics hardware manufacturing sector faces lack of level-playing field against competing nations on account of several disabilities which render the sector uncompetitive.
    The National Policy on Electronics 2019 aims to promote domestic manufacturing and export in the entire value-chain of Electronics System Design and Manufacturing (ESDM) to achieve a turnover of $400 billion (Rs 26 lakh crore) by 2025.
    The issues faced by the sector include lack of adequate infrastructure, domestic supply chain and logistics, high cost of finance, inadequate availability of quality power, inadequate components manufacturing base, limited design capabilities and focus on research and development by the industry, and inadequacies in skill development.
    India is heavily dependent on the import of electronic components and systems.In fiscal year 2019, India’s electronics imports stood at $55.6 billion, most of it for use in smartphones.
    According to a joint study by ASSOCHAM and NEC Technologies, domestic demand for electronic products is expected to grow at a CAGR (compound annual growth rate) of 41 per cent during 2017-2020 to reach a turnover of US$ 400 billion by 2020.
    The same study also mentions that domestic manufacturing of electronic hardware, which is currently growing at a CAGR of 27 per cent, may touch US$ 104 billion in 2020. This offers a huge opportunity for the Indian electronics manufacturing services (EMS) sector.

Way Forward
    EMCs would aid the growth of the ESDM sector, help development of entrepreneurial ecosystem, drive innovation and catalyze the economic growth of the region by attracting investments in the sector, increasing employment opportunities and tax revenues.
    This new policy also advances the Prime Minister Narendra Modi's vision expressed in the National Policy for Electronics (NPE), 2019 to make India a global hub for mobile and component manufacturing.
    Local firms backed by the ‘Make in India’ initiative, as well as global giants looking to relocate their manufacturing bases from China to alternate locations such as India, Vietnam and Indonesia due to mounting labour costs, will provide a strong impetus to the Indian electronics industry.
    There is a need to end tax uncertainties and simplify tax regime and provide investment incentives. Electronics Export Clusters could be established in identified big coastal economic zones under Sagarmala Project.

National Policy on Electronics 2019, M-SIPS