The government is expected to increase the outlay for the scheme for promotion of manufacturing of electronic components and semiconductors (SPECS) to Rs 10,000 crore and extend the scheme by five years, according to people aware of the matter.
The scheme was launched in 2020 with an outlay of Rs 3,285 crore to promote production of electronic components and chipsets in the country to increase domestic value addition down the supply chain. The scheme, which was open for applications initially for a period of three years, was extended by a year till March 31, 2024. The incentives under the scheme are available till FY28.
Of the total Rs 3,285 crore, currently about Rs 1,300 crore balance is left with the government to be disbursed as incentives. According to officials, companies such as Tata Electronics and Samsung Display have claimed the maximum incentives as of now.
“Industry gave a proposal to extend the scheme and increase the outlay. Discussions are happening to identify more components which can be made in India and many local companies are also being identified for manufacturing components,” a government official said, adding that the IT ministry-set taskforce is also in line with extending the SPECS scheme with an increased outlay.
The current scheme also offers financial incentive of 25% of capital expenditure for the manufacturing of goods such as discrete semiconductor devices including transistors, diodes, etc, USB/data cables, HDMI cables, sensors, transducers, actuators and crystals for electronic applications, printed circuit boards (PCBs), etc.
In a written reply to Lok Sabha in April, minister of state for electronics and IT Rajeev Chandrasekhar said the government has approved 34 electronic components manufacturing proposals worth Rs 11,187 crore till March 30, 2023.
Lately, the IT ministry also formed a nine-member task force with industry players to deliberate on electronic products and components that can be brought under domestic manufacturing, current issues with regard to hardware manufacturing, need for any policy intervention, timeline by which certain issues can be resolved, among other things.
Industry representatives like Ajai Chowdhry, founder of HCL; Sanjay Nayak of Tejas Networks; Vivek Tyagi, former chairperson of India Electronics and Semiconductor Association (IESA), Aman Gupta of boAt, Sunil Vachani, chairman, Dixon Technologies; Hari Om Rai, chairman, Lava International; are part of the committee.
“On the lines of the semiconductor incentive scheme, there have been discussions to increase SPECS and other schemes also indefinitely. However, no decision has been taken with regard to that,” another government official said.
In an interaction with FE, Ajai Chowdhry, founder of HCL, said, “Introduction of design elements in all the incentive schemes and bringing in startups together for that would increase the scope for domestic manufacturing of such components also, thereby creating more value addition of local products.”
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Value addition is where domestic component is high when a made-in-India product is sold.
“When you design the products in India, you look for Indian components also. You buy more Indian components and Indian software, all those things make value addition higher,” Chowdhry added.
As of March end, the government had received 120 applications under SPECS and all were from domestic companies.