Context

Government has cleared the National Policy on Electronics 2019. It envisions positioning India as a global hub for Electronics System Design and Manufacturing.

National Policy on Electronics 2012

Need of new National Policy on Electronics

1. To overcome the shortcoming of 2012 policy on electronics. With the advent of 5G, artificial intelligence and the Internet of Things, India needs a vision document on how to use these digital tools for the growth and development of the country
2. Domestic electronics hardware manufacturing industry faces severaldisability factors which makes indigenous manufacturing uncompetitive some factors are

• high cost of power, finance and freight
• inadequate infrastructure
• lack of supply chain
• high transaction cost
• inverted tariff structure

3. Demand of electronic hardware has increased significantly but the value addition continues to be low in the absence of a robust components manufacturing ecosystem in the country.
4. India has entered into Free Trade Agreements (FTA) withThailand, ASEAN, Korea, Japan, etc., wherein import of electronichardware from these countries is at preferential duty, lower than normaltariff rate which makes Indian product uncompetitive

Keyobjectives of national electronic policy 2019

1. Enable flow of investment and technologyleading to higher value addition in the domestically manufactured electronic products,
2. Increased electronics hardware manufacturing in the country and their export.Creating eco-system for globally competitive ESDM sector
3. Generating substantial employment opportunities. Provide support for significantly enhancing availability of skilled manpower in the ESDM sector.
4. Develop core competencies in all the sub-sectors of Electronics, including inter-alia Electronic components and Semiconductors, Telecommunication equipment,Medical electronics, Defence Electronics, Automotive electronics, Industrial Electronics, Strategic Electronics, etc., and Fabless Chip Design.
5. Devise suitable methods for promotion of manufacturing of electronicgoods covered under the Information Technology Agreement (ITA-1) of WTO.
6. Facilitate cost effective loans for setting up and expansion of electronics manufacturing units.
7. Promote path-breaking research, grass root level innovations and early stage Start-ups in emerging technology areas such as 5G, IoT/ Sensors, Drones, Artificial Intelligence (AI) etc to solve real-life problems.
8. Enhance understanding of cyber security issues/ concerns, risks and mitigation measures thereof pertaining to electronic products.
9. Promote research, innovation and support to industry for green processes and sustainable e-Waste management, including safe disposal of e-Waste in an environment friendly manner, development of e-Waste recycling industry and adoption of best practices in e-Waste management.
10. Proactive role of statesin promotion of electronics manufacturing by providing conducive environment to promote investments.

Key Features

1. Policy Target: It target turnover of $400 billion (about ?26 lakh crore) for the electronics system design and manufacturing (ESDM) sector by 2025. The turnover amount shall include targeted production of 1 billion mobile handsets by 2025 valued at $190 billion, including 600 million mobile handsets valued at $110 billion for export.
2. End modified special incentive scheme (M-SIPS): The government will end modified special incentive scheme (M-SIPS) with schemes that it will find easier to implement such as interest subsidy and credit default guarantee

• Interest subvention scheme:It suggested that an interest subsidy of 4% will be provided on loansof up to Rs 1,000 crore on plant and machinery. In case of a larger loan, subsidy will be limited to Rs 1,000 crore.
• Credit Default guarantee fund:The government proposes to create a fund to provide default guarantee of up to 75% to banks for plant and machine loans of up to ?100 crore to promote small and new investors. The scheme will be on the pattern of credit guarantee being provided by SIDBI for the SME sector.

3. Special Package for mega projects: The policy calls for providing special package of incentives for mega projects which are “extremely high-tech” and entail huge investments, such as semiconductor facilities display fabrication, etc.
4. Sovereign patent fund:It has proposed a sovereign patent fund to acquire intellectual property for chips and chip components. It formulates joint strategy and action plan along with Industry, Academia and R&D Organizations to identify core technologies and develop IPs and make them available to the Industry.
5. Renewed Electronics Manufacturing Cluster Scheme: A renewed electronic manufacturing cluster scheme will provide infrastructure support for a group of industries that are part of the product supply chain rather than individual industries. Also, support for creating infrastructure and common facilities will be provided in collaboration with state governments.
6. Exempt the import duty on capital equipment:It reduce capitalexpenditure for setting up/ expansion of existing units and addressdisabilities to a certain extent.
7. Simplified tax regime:The government has proposed to provide suitable direct tax benefits for setting up a new manufacturing unit or expansion of an existing unit.The policy also proposes to promote a forward looking and stable tax regime, including advance intimation to the industry to plan investments in the form of phased manufacturing programme in various segments of electronics, with a sunset clause.
8. Set up standard setting bodywithin MeitY for mandating compliance to standards for electronics products.
9. Create institutional mechanism for implementation of various schemes: It constituting a High-Level Advisory Committee to review the implementation status and provide strategic recommendations/ decisions from time to time.

Conclusion

Electronics Industry is the world’s largest and fastest growing Industry and is increasingly finding applications in all sectors of the economy. World over, Electronics is recognized as a meta-resource. The Government attaches high priority to electronics hardware manufacturing and it is one of the important pillars of both “Make in India” and “Digital India” programmes of Government of India.

The ESDM industry is of strategic importance as well. 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. However, the electronics hardware manufacturing sector faces lack of level playing field vis-à-vis competing nations on account of several disabilities. The new electronic policy is step in right direction to mitigate the loss, make local manufacturing competitive and generate huge employment.