In the light of Government’s target to make India a global hub for mobile and component manufacturing, discuss various measures taken by the Government to boost domestic manufacturing along with attracting investment in electronic component manufacturing. What is the significance of the ESDM sector? Discuss the challenges in this sector. Suggest measures to achieve NET ZERO Imports in electronics by 2020.
Indian electronics hardware production has been registering a Compound Annual Growth Rate (CAGR) of 26.7% (2017-18), as against a growth rate of 5.5% in 2014-15. Electronics imports of India are rising and it deems necessary to boost indigenous manufacturing in the sector. Imports of electronics hardware account for more than half of India’s domestic production.
Government Measures:
Production Incentive Scheme:
The Production Incentive Scheme for Large Scale Electronics Manufacturing proposes production linked incentives to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components including Assembly, Testing, Marking and Packaging (ATMP) units.
Electronics Manufacturing Clusters (EMC 2.0):
- Electronics Manufacturing Clusters (EMC 2.0) Scheme for development of world class infrastructure along with common facilities and amenities through Electronics Manufacturing Clusters (EMCs) that will help India to become the mobile manufacturing hub in the world.
- The Scheme will create a robust infrastructure base for the electronic industry to attract flow of investment in the ESDM sector and lead to greater employment opportunities.
Scheme for Promotion of Manufacturing of Electronics Components and Semiconductors (SPECS):
- It was proposed to offer a financial incentive of 25% of capital expenditure for the manufacturing of goods as per list annexed that constitute the supply chain of an electronic product
- The scheme will help offset the disability for domestic manufacturing of components and semiconductors in order to strengthen the electronics manufacturing ecosystem in the country.
National policy on electronics 2019:
- Create an eco-system for globally competitive ESDM sector: Promoting domestic manufacturing and export in the entire value-chain of ESDM.
- Provide incentives and support for manufacturing of core electronic components.
- Provide special packages of incentives for mega projects which are extremely high-tech and entail huge investments, such as semiconductor facilities display fabrication, etc.
- Promote Industry-led R&D and innovation in all sub-sectors of electronics, including grass root level innovations and early stage Start-ups in emerging technology areas such as 5G, loT/ Sensors, Artificial Intelligence (Al), Machine Learning, Virtual Reality (VR), Drones, Robotics, Additive Manufacturing, Photonics, Nano-based devices, etc.
- Provide incentives and support for significantly enhancing availability of skilled manpower, including re-skilling.
- Create Sovereign Patent Fund (SPF) to promote the development and acquisition of IPs in the ESDM sector.
- Promote trusted electronics value chain initiatives to improve national cyber security profile.
Digital India Programme:
- Government focussed on digital access, digital inclusion and digital empowerment in an “unparalleled manner” through the Digital India Programme.
Significance of ESDM Sector
- Economic: Electronics Industry is the world’s largest and fastest growing Industry and is increasingly finding applications in all sectors of the economy. Electronics hardware manufacturing is one of the important pillars of both “Make in India” and “Digital India”.
- Security: Focus on electronics hardware manufacturing up to the Chip level is required due to the growing security concerns associated with electronics hardware in critical sectors including cyberspace, communications networks etc.
- Strategic: India is a signatory to the Information Technology Agreement (ITA-1) of WTO and Free Trade Agreements (FTAs) with various countries/ trading blocs such as ASEAN, Korea and Japan. Lagging in this sector will see India overwhelmed by imports.
Challenges in the Electronics Sector:
- Lack of level playing field vis-a-vis competing nations due to several factors which render domestic manufacturing uncompetitive.
- Lack of adequate infrastructure
- High cost of finance
- Inadequate availability of quality power
- Inadequate components manufacturing base
- Limited focus on R&D by the industry etc.
Measures to make India a Hub of Electronics:
- Promoting Ease-of-doing Business- by facilitating a single window mechanism for global investors
- Encourage Industry-led R&D and Innovation- in all sub-sectors of electronics. This would encompass support for various initiatives in areas like 5G, IoT/ Sensors, Artificial Intelligence etc.
- Human Resource Development- by generating research base at Ph.D. level, opportunities for joint IPRs to Indian candidates at foreign institutions.
- Export Promotion- by providing attractive package of incentives so that exporters can compete in global markets
- Promote Cyber Security- by enhanced understanding of cyber security issues, risks; development of testing facilities etc by the start-ups.
- Mega Projects- by providing a special package which would invite extremely high-tech and huge investments in areas like semiconductor facilities, display fabrication etc.
- Promoting Eco-park for e-Waste processing
- Warehousing of raw materials
- Acquiring mines of Rare Earth Metals in foreign countries (Africa, Australia)
- Developing an index to assess the status of electronics manufacturing industry in the states.
- Encouraging FABS, Fabless design, Set top boxes, VSATs, Mobiles, Consumer & Medical Electronics, Smart Energy meters, Smart cards, micro-ATMs
- Encouraging National Award, Marketing, Brand Building
Successful implementation of the schemes keeping challenges in mind can enable flow of investment and technology, leading to higher value addition in the domestically manufactured electronic products, increased electronics hardware manufacturing in the country and their export, while generating substantial employment opportunities.