Cabinet extends capital subsidy for electronics manufacturing

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Published: July 23, 2015 1:07:36 AM

The government has extended the capital subsidy scheme for electronics manufacturing firms by another five years to help the nascent industry to scale up domestic manufacturing to reduce dependence on imports.

The government has extended the capital subsidy scheme for electronics manufacturing firms by another five years to help the nascent industry to scale up domestic manufacturing to reduce dependence on imports. The cabinet on Tuesday gave approval to the extension of the Modified Special Incentive Package Scheme (MSIPS) to push Prime Minister Narendra Modi’s ‘Make in India’ initiative, government sources said.

The scheme, implemented in July 2012 for a period of three years, provides capital subsidy of 20% in SEZ and 25% in non-SEZ units engaged in electronics manufacturing. The cabinet also expanded the scope of the scheme to benefit 15 new product categories including smart cards, consumer appliances such as ACs and refrigerators, internet of things products, optical fibres, semiconductor chips and manufacturing of electronic products.

The government also eased rules for companies to receive benefits under the scheme. It allowed MSIPS incentives from the date of submission of application, disbursement of benefits on a quarterly basis as against annual basis, and allowing the benefits across the country as against only in notified areas. In his Independence Day speech last year, Modi had expressed concern over the huge import bill on account of electronics and had promised to create a favourable environment to make the country a global manufacturing hub.

The demand for electronics in India is expected to reach $400 billion by 2020. However, India’s domestic manufacturing is very negligible at the moment. Under its Digital India programme, the government has set an ambitious goal of ‘net zero import’ in electronics.

In the first two years of the MSIPS, only 10 units had committed investments of R1,369 crore. The scheme has attained a renewed vigour in the last 14 months under the Make in India initiative with 32 proposals committing investments of R9,000 crore.

Among other decisions, the cabinet approved the revised cost estimate of the 1,200 MW Punatsangchu-I hydroelectric project in Bhutan to R9,375 crore, due to several factors including time overrun of about two-and-a-half years. It also approved a proposal to restructure the World Bank-assisted Integrated Coastal Zone Management project by revising the cost estimate from R1,155 crore to R1,580 crore. The project period was also extended from March 31, 2015 to December 31, 2017.

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