Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme

  • On 21st March, 2020, the Union Cabinet approved the Modified Electronics Manufacturing Clusters (EMC2.0) Scheme.

Aim

  • Development of world class infrastructure along with common facilities and amenities through Electronics Manufacturing Clusters (EMCs).

Need

  • Currently, 85 percent of the global mobile exports is catered to by two countries - China and Vietnam.
  • Further, only three global ecosystems - Samsung, Apple and the Chinese majors dominate the multi-billion-dollar mobile phone export.
  • Also, it is well-recognised that India suffers a manufacturing disability vis-a-vis China (19-23 percent) and Vietnam (9-12 percent).

Background

  • To 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) have been approved in 15 states across the country.

Present Market Status

  • 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 for 2.3% of India’s GDP at present.

Key Points of EMC 2.0 Scheme

Financial Implications

  • The total outlay of the propose EMC 2.0 Scheme is Rs. 3,762.25 crore , which includes the financial assistance of Rs. 3,725 crore and administrative and management expense to the tune of Rs. 37.25, over a period of eight (8) years.
  • It will provide financial assistance up to 50% of the project cost subject to ceiling of ₹70 crore per 100 acres of land for setting up of Electronics Manufacturing Cluster projects.
  • For CFC, financial assistance of 75% of the project cost subject to a ceiling of ₹75 crore will be provided.

Setting of EMCs and CFCs

  • EMC 2.0 Scheme would support setting up of both Electronics Manufacturing Clusters (EMCs) and Common Facility Centers (CFCs). </strong>
  • 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.

Expected Benefits

  • Creating Robust Infrastructure Base: The Scheme will create a robust infrastructure base for electronic leading to greater employment opportunities.
  • Development of Entrepreneurial Ecosystem: It would aid the growth of the Electronic System Design and Manufacturing(ESDM) sector, help development of entrepreneurial ecosystem, drive innovation and catalyze the economic growth of the region by attracting investments in the sector and generating tax revenues.
  • Boost to Make in India: The scheme is in line with the government’s vision expressed in the National Policy for Electronics (NPE), 2019 and will further assist in the necessary boost to the ‘Make in India’ initiative and support India into becoming an electronics manufacturing hub.

National Policy on Electronics - 2019

  • The National Policy on Electronics- 2019 was released by the Ministry of Electronics and Information Technology (MeitY) on 25th February, 2019.

Objective

  • The Policy envisions positioning India as a global hub for Electronics System Design and Manufacturing - (ESDM) by encouraging and driving capabilities in the country for developing core components, including chipsets, and creating an enabling environment for the industry to compete globally.

Salient Features

  • Create eco-system for globally competitive ESDM sector: Promoting domestic manufacturing and export in the entire value-chain of ESDM.
  • Provide incentives and support for manufacturing of core electronic components.
  • Provide special package of incentives for mega projects which are extremely high-tech and entail huge investments, such as semiconductor facilities display fabrication, etc.
  • Formulate suitable schemes and incentive mechanisms to encourage new units and expansion of existing units.
  • Promote Industry-led R&D and innovation in all sub-sectors of electronics, including grass root level innovations and early stage Start-ups in emerging technology areas such as 5G, loT/ Sensors, Artificial Intelligence (Al), Machine Learning, Virtual Reality (VR), Drones, Robotics,   Additive Manufacturing, Photonics, Nano-based devices, etc.
  • Provide incentives and support for significantly enhancing availability of skilled manpower, including re-skilling.
  • Special thrust on Fabless  Chip  Design  Industry,  Medical Electronic Devices Industry, Automotive Electronics Industry and Power Electronics for Mobility and Strategic Electronics Industry.
  • Promote trusted electronics value chain initiatives to improve national cyber security profile.

Main Interventions under NPE-2019

Interest Subvention

  • Here, the government will provide an interest subsidy of 4 percent on loans upto Rs 10000 crores. The loan amount should spend on plant and machineries.

Credit Guarantee Fund Scheme

  • Another incentive under the NPE is the Credit Guarantee Fund Scheme that will provide default guarantee to banks up to RDs 75% of the loan amount on plant and machinery for loans up to Rs 100 crores.

Electronics Manufacturing Clusters 2.0

  • The NPE also upgrades the existing Electronics Manufacturing Clusters scheme into Electronics Manufacturing 2.0. Sovereign Patent Fund will be used to upgrade technology and knowledge in this initiative. The objective is to ensure that the chips and components can be made available to Indian firms at low cost.

Sovereign Patent Fund (SPF)

  • The NPE 2019 aims to create a Sovereign Patent Fund (SPF) to promote the development and acquisition of IPs (Intellectual Property) in ESDM sector.

Source : Civil Services Chronicle Online, March, 2020