Draft electronics policy plans sops for rapid hardware manufacture; stable tax regime

The Ministry of Electronics and Information Technology (MeitY) has come out with the draft notification of ‘National Policy on Electronics 2018’ (NPE 2018) for the Electronics System Design and Manufacturing (ESDM) Sector of India.

MeitY said that it will coordinate with the Ministries and Departments concerned to provide incentives to the industry for rapid and robust expansion of electronics hardware manufacturing within the country.

The draft policy, released on Wednesday, talks about replacement of certain schemes such as Modified Special Incentive Package Scheme (M-SIPS) with plans that are easier to implement, such as interest subsidy and credit default guarantee, in order to encourage new units and in the expansion of existing units in the electronics manufacturing sector.

It also said the government will provide support for infrastructure development through formulation a new scheme by modifying the existing Electronics Manufacturing Clusters (EMC) scheme, for supporting both greenfield and brownfield manufacturing clusters.

“This shall include leveraging the existing and upcoming industrial clusters/manufacturing zones/corridors in the country, with provision for ready-built factories, for attracting investments in complete value chain of identified verticals,” the draft policy noted.

Doing away with M-SIPS would deprive investors of 20- 25 per cent capital subsidy for electronic manufacturing in special economic zones (SEZs) or non-SEZs depending on the projects.

Introduced in 2012, the M-SIPS was not as it is enough for investors, who would get incentives from the government 10 years after investing ₹1 crore to ₹.5,000 crore.

The draft NPE 2018 talks about exempting the import duty on identified capital equipment not being manufactured in the country to reduce capital expenditure for setting up/expansion of existing units.

It said a forward looking and stable tax regime, including advance intimation to the industry to plan investments in the form of Phased Manufacturing Programme (PMP) in various segments of electronics, with a sunset clause should be promoted.

The draft also said the government would “Levy cess on identified electronic goods to be considered to generate resources for promotion of certain critical sub-sectors of electronics manufacturing such as semiconductor wafer fabrication and display fabrication units”.

Meanwhile, to enhance understanding of cyber security issues/ concerns, risks and mitigation measures pertaining to electronic products and for the requirements of government sector, the Ministry will also set up a government-owned testing and evaluation facility.

“MeitY, with the approval of Competent Authority, may review and amend various aspects of this policy from time to time, depending upon the experience gained during implementation, market dynamics, feedback from stakeholders, etc,” it added.