Cabinet approves Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme

In a historic decision and to address the import of electronics components, the Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has approved financial assistance to the Modified Electronics Manufacturing Clusters (EMC2.0) Scheme for development of world class infrastructure along with common facilities and amenities through Electronics Manufacturing Clusters (EMCs). It is expected that these EMCs would aid the growth of the ESDM sector, help development of entrepreneurial ecosystem, drive innovation and catalyze the economic growth of the region by attracting investments in the sector, increasing employment opportunities and tax revenues.

There is a need for continuation of such scheme in modified form for further strengthening the infrastructure base for electronics industry in the country and deepening the electronics value chain.

It will build and create requisite infrastructure ecosystem for electronics manufacturing; Ministry of Electronics and Information Technology (MeitY) notified Electronics Manufacturing Clusters (EMC) Scheme which was open for receipt of applications upto October, 2017. A period of 5 years (i.e. upto October, 2022) is available for disbursement of funds for the approved projects. Under EMC scheme, 20 Greenfield EMCs and 3 Common Facility Centres (CFCs) measuring an area of 3565 acres with project cost of Rs. 3898 crore including Government Grant-in-aid of Rs. 1577 crore have been approved in 15 states across the country.

India’s electronics production has increased from Rs. 1,90,366 crore (US$29 billion) in 2014-15 to Rs. 4,58,006 (US$ 70 billion) in 2018-19, at a Compound Annual Growth Rate (CAGR) of about 25%. India’s share in global electronics manufacturing grew from 1.3% (2012) to 3.0% (2018). It accounts jfor 2.3% of India’s GDP at present.

The Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme would support setting up of both Electronics Manufacturing Clusters (EMCs) and Common Facility Centers (CFCs). For the purpose of this Scheme, an Electronics Manufacturing Cluster (EMC) would set up in geographical areas of certain minimum extent, preferably contiguous, where the focus is on development of basic infrastructure, amenities and other common facilities for the ESDM units. For Common Facility Centre (CFC), there should be a significant number of existing ESDM units located in the area and the focus is on upgrading common technical infrastructure and providing common facilities for the ESDM units in such EMCs, Industrial Areas/Parks/industrial corridors.

Financial Implications

The total outlay of the propose EMC 2.0 Scheme is Rs. 3,762.25 crore (Rupees Three Thousand Seven Hundred Sixty Two Crore and Twenty Five Lakh Only) which includes the financial assistance of Rs. 3,725 crore (Rupees Three Thousand Twenty Five Hundred Crore Only) and administrative and management expense to the tune of Rs. 37.25 crore (Rupees Thirty Seven Crore and Twenty Five Lakh Only) over a period of eight (8) years.

Benefits

The Scheme will create a robust infrastructure base for electronic industry to attract flow of investment in ESDM sector and lead to greater employment opportunities. Following are the expected outputs/outcomes for the Scheme:

Availability of ready infrastructure and Plug & Play facility for attracting investment in electronics sector:

New investment in electronics sector

Jobs created by the manufacturing units;

Revenue in the form of taxes paid by the manufacturing units

MAIT Congratulates MEITY & the Government of India (GoI) on a very progressive step towards boosting electronics manufacturing in India. says, Nitin Kunkolienker, President, MAIT

Two key recommendations have been taken from the MAIT study about India’s aspiration to become a major global hub for electronics manufacturing, namely

Export led electronic manufacturing strategy at a global scale.

Make India manufacturing Globally competitive

The series of steps taken by the GoI, beginning with reducing Corporate Income Tax to 15% followed by the Production Linked Incentive scheme is a major step by India in this direction.

India should now see large scale manufacturing happening in the country, translating into progressive increase in value addition from approx. 20% to 35-40%. The growth of ancillary units, engineering expertise, product engineering and software. It is the major EMS companies that will be leading the manufacturing thrust like Flex, Wistron, Foxcon, Dixon and more.

It is now the Industries’ turn to rise to the occasion. The Brands need to take advantage of this to drive up demand allocation into India.