Subsidy booster coming for electronics manufacturers

Adith Charlie | | Updated on: Dec 06, 2021


10% production-linked sop to replace tax reimbursement; move to cut surging imports

In a bid to make domestic electronics manufacturing more attractive, the Centre will soon dish out production-linked subsidies for companies that commit significant capital to make semiconductors, microprocessors and other such hi-tech products in the country.

According to a note formulated by the Department of Electronics and Information Technology (DeitY) for the Cabinet, electronic manufacturers will get a 10 per cent subsidy on the production turnover. This will be in addition to the subsidy the Centre has offered on upfront investments to set up such plants. Production subsidy is given by the government to firms based on the level of output.

This is a part of DeitY’s proposal to amend the Modified Special Incentive Package Scheme (M-SIPS), a programme approved in 2012 to boost electronic manufacturing in the country.

As per the Cabinet note, seen by BusinessLine , the proposed production subsidy will replace the existing provision of reimbursing manufacturers the amount they spend on Central taxes and duties for making hi-tech electronics products, including microprocessors.

According to senior government officials, the amendment is being made after receiving industry representations. “Many players have written to us that production-linked subsidy is a better way of incentivising local manufacturing than giving tax reimbursements. The Finance Ministry is also in favour of this method,” an official said.

India currently imports electronics goods worth $100 billion every year. By 2020, electronics goods import will cross $400 billion to surpass the fuel import bill, Ravi Shankar Prasad, Union Minister for Communications and Information Technology, had said in September last year

Under M-SIPS, the Centre intends to provide benefits of up to ₹10,000 crore to the electronics products and components industry.

The scheme provides subsidy for capital outlays with a limit of 20 per cent for investments in Special Economic Zones and 25 per cent in non-SEZs.

Under this scheme, the Centre has already received 47 applications for projects worth ₹16,602 crore as on January 10, DeitY said in the note.

Of these, 29 projects entailing investments worth ₹4,416 crore have been approved, while ₹2,127 crore investments have been recommended by the appraisal committee.

Prime Minister Narendra Modi is said to have directed the DeitY to ensure that the net import-export balance for the sector be brought down to zero by 2020 as part of the ‘Make in India’ plan.

Tata’s $150-million aero-stucture plans

TAL Manufacturing Solutions Ltd (TAL), a wholly-owned subsidiary of Tata Motors, has signed a $150-million multi-year contract with Germany’s RUAG Aerostructures for manufacturing and supply of aero structural components. Rajesh Khatri, ED and CEO of TAL, said, “This contract will see us investing further in our state-of-the-art aerospace infrastructure at Nagpur and will uniquely position us as a supplier to two of the world’s most advanced and successful airplane programmes, the Boeing 787 Dreamliner and the Airbus A320.”

ThyssenKrupp to set up ₹300-cr lift unit

ThyssenKrupp AG, the diversified German industrial group, will invest about ₹300 crore to set up a plant for producing hi-tech elevators in Pune, reports Suresh Iyengar. The company’s investment would reduce its import dependence to less than 10 per cent from 30 per cent. Oliver Burkhard, Member of the company’s Executive Board, said the demand for elevators is expected to increase with construction of high-rise buildings becoming common with growing urbanisation.

Published on February 17, 2015
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