Economy

EMC 2.0 Scheme will help India become mobile manufacturing hub

Our Bureau New Delhi | Updated on March 21, 2020 Published on March 21, 2020

Chips matter: The electronics sector is crucial for India’s economic growth   -  Getty Images/iStockphoto

The Cabinet has approved the Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme for development of world class infrastructure along with common facilities and amenities through Electronics Manufacturing Clusters (EMCs) that will help India to become the mobile manufacturing hub in the world.

This new policy also advances the Prime Minister Narendra Modi's vision expressed in the National Policy for Electronics (NPE), 2019 to make India a global hub for mobile and component manufacturing.

It is expected that these EMCs would aid the growth of the ESDM sector, help development of entrepreneurial ecosystem, drive innovation and catalyse the economic growth of the region by attracting investments in the sector, increasing employment opportunities and tax revenues.

The government has proposed a total outlay of the proposed EMC 2.0 Scheme at 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 crore over a period of eight years.

According to Pankaj Mohindroo, Chairman, India Cellular and Electronics Association (ICEA), “The new Production-linked Incentive Scheme (PLI) would not only support the Government’s efforts to establish India an integral part of the Global Value Chain (GVC) in the mobile handset sector, but this step will also help develop Indian Champion companies to tap the Global as well as Indian markets through these specific production incentivisation measures."

He said once every decade, the government announces a policy that can be a game-changer — taking the sector to the next level and PLI is exactly that. Its visionary, scalable and global in its outlook.

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, a government statement said.

Some of the expected outputs/outcomes for the Scheme include 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 and revenue in the form of taxes paid by the manufacturing units.

According to industry experts mobile phone production is a 'winner takes all' business. Currently, 85 per cent 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 such as Oppo, Vivo, Xiaomi and Huawei, dominate the multi-billion-dollar mobile phone export.

It is well-recognised that India suffers a manufacturing disability vis-a-vis China (19-23 per cent) and Vietnam (9-12 per cent). The PLI is a mid-term stimulus to correct such disabilities, to help India build global capacities, they said.

According to Manufacturers Association Of Information Technology (MAIT), India should now see large scale manufacturing happening in the country, translating into progressive increase in value addition from around 20 per cent to 35-40 per cent.

"It is the major EMS companies that will be leading the manufacturing thrust like Flex, Wistron, Foxcon, Dixon and more. Thus, a framework that is product agnostic will see India emerge as a leader in multiple product categories, including those where much higher levels of value addition can be achieved. The industry hopes this exercise will also get extended to other electronic products such as IT, Datacom, Medical, Industrial, etc," Nitin Kunkolienker, President, MAIT, said.  

According to Kamal Nandi, President, Consumer Electronics and Appliances Manufacturers Association (CEAMA), the steps taken by the government will help to boost domestic manufacturing and attract large investments in the electronics value chain.

"This will also put an upward thrust on the economy by bringing in large scale electronics manufacturing to India. The announcement of the PLI for Large Scale Electronics Manufacturing, will assist in the necessary boost to the ‘Make in India’ initiative and support India into becoming an electronics manufacturing hub," he said.

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Published on March 21, 2020
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