The Government’s ‘Make In India’ slogan is now getting some serious policy thrust. The Ministry of Information Technology has proposed changes in the two-year-old special incentive package scheme.

The revisions include lowering the eligibility threshold and extending the benefit to new product categories, such as air conditioners and refrigerators. The changes have been proposed with the objective of widening the scope of the scheme and removing procedural bottlenecks.

The industry had earlier told the Government that more needs to be done to achieve the target of zero net imports of electronic goods.

Until now 40 applications involving investments of nearly ₹14,600 crore have been received under the scheme. Of these, 16 projects worth ₹2,230 crore have been approved.

However, the domestic demand of electronic goods is projected to grow to $400 billion by 2020, of which domestic production can cater to only $100 billion.

Cabinet note

To bridge this gap, the IT Ministry has floated a Cabinet note proposing broad changes to the 2012 policy. The minimum investment required to be eligible for the incentive has been brought down to help smaller players take advantage of it.

For example, if a company wants to set up an LCD fabrication unit, it can claim benefits with a minimum investment of ₹1,500 crore instead of ₹4,000 crore as stipulated by the existing policy.

The incentives will be disbursed immediately after the investment threshold has been achieved. Thereafter, it will be made on a quarterly basis instead of on an annual basis under the existing policy.

No change in incentive

There is, however, no change in the actual incentive.

The scheme provides a subsidy in the form of reimbursements of capital expenditure.

Companies get a 20 per cent subsidy for investments in Special Economic Zones and 25 per cent in non-SEZs. The scheme was open to applications made before July 2015.

The IT Ministry proposes to extend this by another five years.

“While the policy has been able to create positive trends in investment in electronics, the proposed investments are still short of the intended target and therefore there is a need for extending implementation of the scheme,” said the Cabinet note, which was seen by Business Line .

One of the limitations of the scheme is the time taken to process applications.

Approvals, involving multiple agencies, take as much as eight months.

comment COMMENT NOW