The electronics manufacturing industry urges the government to provide an amount of Rs 30,000-Rs 35,000 crore production-related incentive (PLI) scheme for components and sub-assemblies, along with a backup of capital expenditure to support rising exports mobile phones and other electronics.
'The incentive scheme is necessary to meet the growing demand for… electronic components at a cost of $75-$80 billion by 2026, and $300 billion by 2032 to support $300 billion of electronic products manufacturing by 2026 and $1.2 trillion by 2032,” the India Cellular & Electronics Association said.ICEA), which represents the top smartphone brands and manufacturing companies, according to.
The purpose of the scheme is to provide incentives domestic value additionespecially in mobile phone production, from 18% now to 35-40%, according to ICEA. production of components must run parallel to the development of semiconductor ecosystem, currently underway in India. “In addressing the growing demand for semiconductors, we must recognize the emerging need to move from a heavy reliance on imports to fostering an indigenous semiconductor ecosystem, supported by localized PCBA operationstargeted circuit design and deeper value addition in product manufacturing,” the industry association said.
It added that the components ecosystem would take at least two to three years to begin commercial production. Once production starts, domestic component production should be able to account for 5 to 10% of total production global demand According to the ICEA, international companies should be invited within six to seven years to gain a large share of the domestic and global parts manufacturing market.
In its submission to the ministry of electronics and information technology, the industry has demanded PLI support with an incentive structure of 4-6% for production of sub-assemblies (camera modules, display assembly, vibration motors, etc.), high-performance printed circuit boards, passive through-hole components and surface mounting components.
“Scale and trust in the ecosystem are crucial ingredients. With more than $50 billion in mobile phone production, we have achieved scale. The government and industry determination to roll out a highly effective incentive for components and some sub-assemblies is very robust. It is a total effort between government and industry – all hands on deck,” said Pankaj Mohindroo, Chairman, ICEA. The industry has recommended the PLI scheme for a period of eight years, with the flexibility to claim incentives for six years within that period.
ICEA has recommended that companies making a threshold investment of Rs 1,000 crore or more to make passive SMD components, lithium-ion cells and high-performance PCBs should be supported by providing them 40% of capex support on a parri-passu basis . along with supporting the production of raw materials and other inputs for the components with an average incentive of 5% for a period of six years.
ICEA said that supporting units in the supply chain to support the above-mentioned component production should be supported by offering them 25% capital support. For critical sub-assemblies and components such as connectors, mechanics, vibration motors, camera modules, display assemblies and speaker modules, an incentive of 4-6% should be given, linked to incremental sales. The industry has sought a 5% interest subvention for production of parts on term loans and working capital needs to undercut high financing costs in India.
