Government Initiatives for Development of Electronic Industry in India

Government Initiatives for dev of electronic industry in India - EHTP Scheme, EPCG Scheme, National Skill Dev, etc

Electronics Hardware Technology Parks (EHTPs)

The Electronics Hardware Technology Parks are 100% export oriented schemes for the manufacture of electronic hardware equipment and products in India. The units that undertake to export their entire production of electronics goods and services are allowed to set up the Electronic Hardware Technology Parks in India. The EHTP units are encouraged to export electronic hardware under the export-oriented scheme.

Salient features of EHTP scheme

  • The EHTP units are allowed to import free of duty all categories of goods including capital goods under the EXIM policy, raw materials, components and other inputs for manufacture, production, and processing of electronic goods and services in India for export.
  • The EHTP units also allowed to import free of duty second-hand capital goods.
  • The EHTP units can procure goods required for manufacture, services, production, and processing duty free from bonded warehouses and Domestic Tariff Areas set up under EXIM policy.
  • The Electronics Hardware Technology Parks can bunch some of the products manufactured by them for sale in the domestic tariff areas as per the norms of the policy.
  • These units are allowed to import goods free of cost or on loan needed for the approved activity.
  • The minimal “Minimum Export Performance” norms are USD 1 million or three times of Cost, Insurance, and Freight (CIF) value of imported goods, whichever is higher.
  • The electronic hardware Technology parks can be set up for both Software and Hardware production and processing in an integrated manner.
  • The EHTP scheme is administered by the Department of Electronics, Government of India that receives applications for setting up the EHTP units.
  • The EHTP units are eligible for a tax holiday and are exempted from paying corporate income tax for a block for 5 years in the first 8 years of its operation.

Export Promotion Capital Goods (EPCG) Scheme

  • The zero duty export promotion capital goods scheme provides custom duty benefits to the exporters of electronic products.
  • The manufacturers of electronic products can import capital goods for pre-production, production, and post-production at zero customs duty subject to an export obligation. The export obligation is equal to 6 times of the customs duty saved on the import of capital goods which is to be fulfilled in the next 6 years from the authorisation date.
  • The concessional 3℅ duty export promotion capital goods scheme allows the manufacturers to import capital goods for pre-production, production and post-production at 3% customs duty subject to an export application. The export obligation is equal to 8 times of the customs duty saved on the import of capital goods which is to be fulfilled in the next 8 years from the authorisation date.
  • The capital goods eligible for concessional customs duty include spares, tools, dies, molds, jigs, fixtures etc. The scheme also provides benefits for the import of second-hand capital goods without any restriction on age.
  • The manufacturers can also fulfill their export obligation by supplying the Information Technology Agreement-1 items to the Domestic Tariff Areas, provided the realisation is in free foreign exchange.
  • The scheme is intended for the promotion of exports from India and the government of India provides incentives and financial support to the exporters through concessions in customs duty etc. Heavy exporters can get the benefits from this scheme. However, manufacturers who expect to sell the produce entirely within the country, cannot get the benefits of this scheme.
  • If the manufacturer is unable to fulfill the stipulated export obligation, then the manufacturer is liable to pay customs dues with 15% interest per annum.

National Skill Development

  • National Skill Development Mission (earlier  National Skill Development Scheme) aims to provide an institutional framework at center and states for implementing skilling activities to train more than 300 million workforces by 2022.
  • The mission will be implemented by the streamlined institutional mechanism under the Ministry of skill development and entrepreneurship. The mission aims to develop conversions across sectors and states for providing skill training in different areas.
  • The National Skill Development Agency, National Skill Development Corporation, and Directorate General of Training would support the Mission Directorate.
  • The National Skill Development Corporation provides services for different sectors including Electronics hardware, IT ITES-BPO etc. intended to develop the electronics and IT industry in India.

Electronics Manufacturing Clusters Scheme

  • The government of India in October 2012 brought Electronics Manufacturing Clusters Scheme with the aim to make India a global player in electronics manufacturing and to upset disabilities faced by industries for reliable infrastructure.
  • The scheme aims to provide support for creating world-class infrastructure to attract investments in the Electronics System Design and Manufacturing (ESDM) sector.
  • The scheme provides grant assistance to set up both Greenfield and Brownfield electronic manufacturing clusters in the country. The financial assistance provided by the government under the EMC scheme is in the form of grant in aid only.
  • The scheme was intended to aid the growth of the ESDM sector and to help the development of an entrepreneurial ecosystem, promote innovation and improve economic growth in the country.
  • The government provided assistance through a special purpose vehicle registered for this purpose.
  • For the Greenfield electronic manufacturing clusters, the financial assistance was 50% of the project cost subject to a ceiling of rupees 50 crores for every hundred acres of land. For brownfield projects assistance was restricted to 75% of the project cost with a ceiling of rupees 50 crores.
  • The scheme is intended to increase investments which will help in the development of world-class infrastructure in the ESDM sector.

Modified special incentive package scheme (M-SIPS)

  • The Government of India notified the Modified Special Incentive Package Scheme (M-SIPS) for offsetting disability and attracting investment in the electronics manufacturing sector.
  • The scheme provides a capital subsidy of 20% in special economic zones (25% in non-SEZ) for electronics manufacturing. The scheme provided reimbursements for central taxes and duties for some high capital investment projects like fabs.
  • The incentives are available for 29 electronic verticals. For each category of products, an investment threshold was prescribed which varied from rupees 1 crore to rupees 5000 crores depending upon the type of project.
  • The incentives were initially available till 26-7-2015 which was later on extended up to 31-12-2018 through an amendment. The Department of Information and Technology received applications for getting incentives under M-SIPS scheme.
  • This amendment in the M-SIPS scheme is intended to move towards central government's goal of net zero imports in electronics by 2020.
  • The incentives under the M-SIPS scheme will be available for investments made within 5 years from the date of approval. The manufacturing units receiving these incentives will provide an undertaking to remain in commercial production for at least three years.
  • The scheme is expected to expedite investments in the ESDM sector and create employment opportunities in India. The scheme would also reduce the country's dependence on import of electronic products.

Other schemes for development of electronic industry in India

Focus Product Scheme

Focus product scheme was introduced by the government of India in 2006. The objective of this scheme is to incentivize the export of certain products for creating employment opportunities, promoting economic growth and earning foreign exchange. Several amendments have been made to this scheme and many more products eligible for export incentives have been given duty credit scrip concessions.

  • According to the scheme, the export of notified products to all countries are entitled to duty credit scrip of 2-5℅ of the export value for each year.
  • The duty credit scrip is a kind of license for importing different products duty free for the scrip value i.e. 2-5℅ exports.
  • The export of the notified commodities to all countries including the special economic zones are eligible for duty credit scrip for each licensing year.
  • The products under the focus product scheme include electronic products for the promotion of electronic industry in India.
  • As per the 2015-20 Foreign Trade Policy, Focus Product Scheme was merged with the Merchandise Exports from India Scheme (MEIS).

Support for international patent protection in Electronics & Information Technology

The Ministry of Electronics and Information Technology launched a scheme, Support for International Patents Protection in Electronics and Information Technology (SIP-EIT) for providing financial support to Micros Small and Medium Enterprises (MSMEs) and Technology startup units for international patent filing. The scheme aims to encourage innovation and to recognize the capabilities of global intellectual property along with creating growth in the Information Communication Technologies and Electronics (ICTE) sector. The scheme also has a second component to support Intellectual Property Rights awareness in electronics and Information Technology Sector.

  • The scheme provides financial support for international filing in the ICTE sector. The government provides reimbursements up to a maximum of rupees 15 lakhs for invention or 50% of expenses incurred in filing the patent.
  • The applicant can apply for this scheme at any stage of international patent filing. The reimbursements will be applicable to the expenditure incurred from the date of acceptance of the application by the Department of Information and Technology.
  • This scheme is a pure grant scheme subject to the approval by Department of Electronics and Information Technology and no stake in the supported patent is envisaged under the scheme.
  • Applicant has to file one application for patent filing in all countries for a particular invention.
  • Under the second component of the scheme, the Ministry of Electronics and Information Technology aims to provide financial support to Educational Institutes, Meity societies, etc., for organising IPR awareness workshops and seminars for sensitizing and disseminating awareness about Intellectual Property Rights among different stakeholders in the Electronics and Information Technology Sector.

Multiplier Grants scheme

The Department of Electronics and Information Technology has been given the responsibility to implement the Multiplier grant scheme to encourage collaborative research and development between industry and R&D institutions for developing products and packages. As per the provisions of the scheme, if the industry supports research and development for development products having commercialization capability at the institutional level, then the government will provide financial support equivalent to twice the amount provided by industry.

The objectives of the scheme are:

  • To establish, nurture and strengthen the link between industry and academic and R&D institutes.
  • Promotion of industry-oriented research and development at institutes.
  • Accelerating and encouraging the development of indigenous products and packages.
  • Bridging the gap between research and development and commercialization/globalization.

Salient features of the scheme :

  • The proposal should be for innovation, research, and development in modulus/products and packages in the Electronics and Information Technology Sector.
  • The outcome of the proposed innovation should be technically and commercially viable.
  • The industry and R&D institutes should jointly submit the project idea for collaborative research to the DeitY under MGS scheme.
  • The DeitY has extended the scheme up to March 31, 2020. The total outlay of the scheme is rupees 36 crores and the contribution of DeitY is rupees 24crorese.

Technology Incubation and Development of Entrepreneurs (TIDE)

  • TIDE scheme was launched in 2008 and is being implemented by the Department of Electronics and Information Technology. The scheme was amended and extended till March 2017.
  • The scheme supports 27 centres at the academic institutions across the country.
  • The scheme focuses on diverse areas of Electronics, Information and Communication Technology, and Management.
  • The scheme aims to assist the institutions of higher learning for strengthening their Technology Incubation Centres and enabling the entrepreneurs for initiating technology startup companies.
  • It aims to commercialize the technologies developed by these technology incubation centres and young entrepreneurs.
  • TIDE incubation centres have the responsibility to provide various services to new enterprises and facilitate linkages essential for their growth.
  • These centres work with angel investors and venture capitalists for mentoring and providing financial support to the startups and enable companies to mature and become commercially viable to transact actual business.
  • The scheme also aims to promote product oriented research and development and bridge the gap between research and development and its commercialization.
  • The DeitY provides financial support and policy support to strengthen the technology incubation activities to ensure indigenous development of products and packages in the ICTE sector.
  • Each TIDE Centre receives a grant in aid assistance upto rupees 155 lacs for improving their infrastructure and for providing financial support to the incubation companies.

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