News Excerpt
Government of India has launched Electronics Incentive Scheme to boost manufacturing of domestic mobiles and electronics component in India.

•    Electronics manufacturing in India has grown rapidly with domestic production of electronics hardware touching $70 bn in 2018-19.  
•    From just 2 mobile phone factories in 2014, India now has become the 2nd largest mobile phone producer in the world.  The exports of electronics have increased from Rs. 38,263 crores in 2014-15 to Rs. 61,908 crores in 2018-19. India’s share in global electronics production has reached 3% in 2018 from just 1.3% in 2012.
•    The electronics manufacturing industry currently provides employment for over
20, 00,000 people in India, of which mobile manufacturing alone accounts for over
6, 00,000 jobs.
•    FAME 2 Scheme: It is intended to provide incentives for setting up charging stations, electric vehicles and for auto industry in India. The government will offer the incentives for electric buses, three-wheelers, and four-wheelers to be used for commercial purposes.
•    Promotion of domestic electronics manufacturing is key component of Make in India program. With efforts such as the National Policy on Electronics, 2019, Modified Special Incentive Scheme (MSIPS), Electronics Manufacturing Clusters and Electronics Development Fund etc.

Key Highlights of Schemes
Central Government has proposed 3 schemes viz-

1. Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing-
o    It proposes a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain including mobile phones, electronic components.
o    Production Linked Incentives of up to INR 40,951 crores will be awarded over a period of 5 years.

2. Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)-
o    It aims to strengthen the manufacturing ecosystem for electronic components and semiconductors.
o    Target manufacturing of electronic components and semiconductors through the scheme will help meet domestic demand, increase value addition and promote employment opportunities in this sector.
o    Incentives of up to INR 3,285 crores will be awarded under the Scheme over a period of 8 years.

3. Modified Electronics Manufacturing Clusters Scheme (EMC 2.0)-
o    It seeks to strengthen the infrastructure base for the electronics industry and deepen the electronics value chain in India.
o    The development of industry-specific facilities like Common Facility Centres, Ready Built Factory, Sheds/Plug and Play facilities will not only strengthen supply chain responsiveness and promote the consolidation of suppliers but also decrease time-to-market and lower logistics costs.
o    EMC 2.0, therefore, provides financial incentives for creating quality infrastructure as well as common facilities and amenities for electronics manufacturers. Financial Incentives of up to INR 3,762 Crores will be disbursed over a period of 8 years.

Challenges of Electronics Manufacturing
    Shrinking Operating Margins: Global competition and new innovations are driving prices down. To remain a cost-efficient and profitable for a company is big challenge.
    Complex Global Supply-Chain: More and more, companies have to juggle internal and external resources while staying within international standards. Issues such as traceability and compliance are increasing operational burdens. It is not unusual for components and sub-components to embark on a journey that touches three or more continents before reaching the end-consumer.
    Service and Warranty Management: Leveraging the global supply-chain is putting more focus on supplier quality management. Lack of assisted services and deficiency of warranty management may lead to the long-term uncertainty.
    Short Product Lifecycles: With quickly changing consumer tastes and preferences, companies and contract manufacturers need to have effective New Product Introduction (NPI) processes in place. Closed-loop communication between sales, manufacturing, and engineering is vital to ensure product launches hit time, volume, and quality targets.
    Uncertain Demand: Electronics products are aggregately economically volatile and cyclical demand cause fluctuations in production. On a more granular level, consumer preference can cause spikes in demand for an individual product or company. Efficient lean capabilities must be in place to keep inventory aligned with demand.
    Sustainability & Durability: Emerging regulations and standards are forcing companies to account more and more for Corporate Social Responsibility (CSR) in decisions. E-Waste, a popular topic today, is driving conversations about the disposal of products and their impact on the environment. Companies must now consider of the complete product lifecycle in decisions.

    Globally, few companies control 80% of the mobile market. This scheme will give fillip to the indigenous mobile manufacturing which will have significant impact on India’s Economy.
    This scheme would give impetus to robust manufacturing ecosystem in India. To further facilitate large-scale manufacturing, development of a supply chain ecosystem and building of new manufacturing clusters in the country, each electronic manufacturing scheme has been carefully constructed to incentivize the electronics manufacturing industry.
    This move is likely to reduce electronic import bill and generating employment for more than 10 lakh people in next five years.
    Data security compliance including other privacy concerns can effectively be implemented and monitored in case of indigenous companies led electronics production.  

A self-reliant India is not an India of isolation & not an act of global trade impositions and protectionism. It is one which enhances its capacity and develops an ecosystem as an asset to the global economy. Make in India is only for a self-reliant, resurgent and robust India.