Draft National Policy on Electronics 2018 (NPE 2018) for Public Consultation

Electronics Industry is the world’s largest and fastest growing Industry and is increasingly finding applications in all sectors of the economy. 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 National Policy on Electronics 2012 (NPE 2012) provided the roadmap for the development of Electronics System Design and Manufacturing (ESDM) sector in the country. Implementation of the Schemes/ Programmes under the aegis of NPE 2012 has successfully consolidated the foundation for a competitive Indian ESDM value chain. The Government now seeks to build on that foundation to propel the growth of the ESDM industry in the country.

Highlights of the policy:

To promote domestic manufacturing in entire value-chain of the ESDM sector for spur economic development in the country. It also aims to double the target of mobile phone production from 500 million units in 2019 to 1 billion by 2025 to meet the objective.

Create $400 billion electronics manufacturing industry by 2025, with mobile phone devices segment accounting for three-fourths of production. It also includes targeted production of 1 billion mobile handsets by 2025, valued at $190 billion (approximately Rs. 13 lakh crore) and also 600 million mobile handsets valued at $110 billion (approximately Rs. 7 lakh crore) for export.

It replaces existing incentive schemes like Modified Special Incentive Package Scheme (M-SIPS), with schemes that are easier to implement such as interest subsidy and credit default guarantee etc. It also takes into consideration interest subsidy and credit default guarantee in order to encourage new units and an expansion of existing units in the electronics manufacturing sector

It also proposes to push the development of core competencies in all sub-sectors of electronics including electronic components and semiconductors, automotive electronics, defense electronics, industrial electronics, strategic electronics etc. It also proposes to set up 20 greenfield and three brownfield electronic manufacturing cluster projects have been sanctioned with a project outlay of Rs 3,898 crore, including Rs 1,577 crore from Central Government.

It proposes suitable direct tax benefits, including inter-alia investment-linked deduction under Income Tax (IT), Act for the electronics manufacturing sector, for setting up of new manufacturing unit or expansion of an existing unit. The proposal includes increasing tax benefits on expenditure incurred on R&D, enhancing the rate of duty drawback for electronics sector, reimbursement of state levies and other levies for which input tax credit is not available, allowing duty-free import of second-hand capital goods for electronics hardware manufacturing etc. It also proposes cess on select electronic goods resources to promote certain critical sub-sectors of electronic manufacturing such as semiconductor wafer fabrication and display fabrication units.

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