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Since the advent of the 21st century, India has grown from heights to heights to reach the stature of a rapidly growing digital and electronic hub. Having said this, indigenous production of electronics or any other product for that matter of fact has always been a matter of concern for India. Various initiatives such as the Make in India Campaign and Atma Nirbhar Bharat are aimed at addressing this issue and induce the much-needed paradigm shift. Moving to the Electronics sector, again, India continues have its woes when it comes to indigenous production, though it boasts of a booming demand run market.
Time and again, the lack of sophisticated infrastructure has been identified as the key deterrent, in this regard. Back in 2012, the then Government launched the Electronic Manufacturing Clusters (EMC) Scheme 1.0 in October, 2012 in an attempt to address this issue. The scheme was henceforth taken forward efficiently by the current government and before it ended in 2017. The current Electronic Manufacturing Clusters Scheme (EMC 2.0) has been launched by the Ministry of Electronics and Information Technology (MeitY) on the 1st of April , 2020 and has subsequently been notified in the Gazette of India.
Apart from intrinsic significance, generally too, the scheme is indeed a significant one, considering the fact that with COVID-19 still making the headlines, the government has decided to act proactively to secure a safehold by building new ventures and partnerships. The subsequent investments from this scheme and two other schemes in the project is expected to generate around 5 lakh direct and 15 lakh indirect jobs. This being said, the scheme will also push the vocal for local cause, besides contributing to the growth of Digital Economy. With the mobile phone manufacturing sector experiencing a huge boom in India, the next call has been for developing the electronic components industry. Global mobile giants like Apple have been eyeing at setting up Indian units after considerable spike in sales, a 78% increase, following the launch of iPhone 11, according to a Financial Express report. The first step at inviting market leaders into India would be setting up self-reliant, electronic unit manufacturing capacities in India that meets the indigenous demand and this scheme has the same as its aim.
Objectives and Purposes
The scheme has its tagline or one liner objective at providing financial assistance for setting up electronic projects and instalments in the Indian soil. The scheme has its lifetime set at 3+5 years, i.e. the scheme will be open for application for a period of 3 years following which it would be taken down and the approved projects would be allocated their respective funding through a period of 5 years. For the same, a dedicated application portal has been launched by the MeitY. Also, the gazette notification has been issued in around eight foreign languages to facilitate foreign multinationals to avail the benefits.
Salient features of the Scheme
The scheme is allocated with a budget of 3,762.25 crores. The same will be used for setting up Electronics Manufacturing Clusters and Common Facility Centers all over India. Thus, the aim is two-fold, to set up new projects and also develop the infrastructure pertaining to the existing facilities. The financial assistance would be 50% of the project cost, which would come with a cap placed at ₹ 70 crores for every 100 acres of land. However, the assistance will not exceed the upper limit placed at ₹ 350 core, which is inclusive of the larger project areas too. The remaining 50% cost would be borne by the state entities, which might be the State Government, the implementation units, industrial corridor development authorities or the public sector units, depending on the framework in the respective states. For the development of existing facilities, the centre will bear 75% of the total costs and the state will bear 25% through its respective state implementation authorities.
For an initial period of four years, an autonomous Society set up by the MeitY, under the name, “Software Technology Parks of India”, will be the Project Management Agency. As far as applications for the scheme are concerned, a Project Review Committee will examine the applications, subsequent to which funds will be granted by the Ministry of Electronics and Information Technology. The fund allocation will be three-phased. It will follow a (30+40+30)% pattern, wherein, the first instalment is granted on the approval, second instalment on allocation of lands to the unit, infrastructure development and the third instalment on completion of the project. Furthermore, the scheme proposes for an illustrative, non-exhaustive list of activities that will come under its funding ambit. This includes Manufacturing Support, essential services, among many others.
This scheme comes as a part of a whopping 50,000 crores project launched by the Ministry of Electronics and Information Technology. The other schemes include Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) with a budget of Rs 3,285 crore and Production Linked Incentive Scheme (PLI) with a budget of around Rs 40,951 crores.
Analysing the EMC 2.0, the scheme in tandem with the others is expected to invite a lot of global multinationals to invest in India. Several features of the Scheme, such as keeping the potential funding list open has been received well by Sector. The idea of incentivising development projects in existing tech parks is expected to provide the much-needed alliance between electronic unit manufacturers and whole component makers. This would further boost India’s intentions to create a sustainable electronic ecosystem, where demand for electronic components pertaining to whole units (such as mobile industries) are also indigenously met and the transaction costs are significantly cut down, in the process. As stated earlier, this will come as a welcome move as far as the Make in India and the relatively new Atma Nirbhar Bharat initiatives are concerned.
On an endnote, the magnitude of COVID-19 has been unprecedented and has brought global supply chains to a stop. China too has been hard hit in this regard. Even though China seems to have flattened the curve and productions seemed to have resumed, China has lost a huge chunk of its competitive advantage in every other sector. The electronics sector is not an exception too. Also, there seems to be a growing atmosphere of distrust amongst the international community towards China. It is at this crucial juncture; the centre has come out with schemes such as Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme. The potential success of the scheme could well change the geographies of global electronics and could potentially push India to the status of an ‘Global Electronic Hub’. With schemes like these promising a lot in fine print, it eventually boils down to one word, implementation.
Author: Pascal Sasil R. from CHRIST (Deemed To Be University), Bangalore.
Editor: Silky Mittal, Junior Editor, Lexlife India