Government considering component-linked incentive scheme

The scheme seeks to establish India as a hub for the production of components as well as a component-producing destination.

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A new component-linked incentive scheme is being developed by the government to promote the manufacturing of electronic components, in addition to semiconductors. The scheme aims to establish India as a product nation as well as a component-producing destination.

While speaking at the launch of the nation’s first designed in India, artificial intelligence-enabled education tablet, Ministry of Electronics and IT secretary S Krishnan said, “We are looking to work towards two aspects – one is on designing products in India, owning the IP (intellectual property) in India…and the second is to increase the number of components, which will get manufactured in India.”

India’s competitors in the electronics trade include China, Thailand, and Vietnam. These countries are home to a majority of component makers and have a trade surplus.

According to analysts, though production-linked incentive schemes for smartphones, consumer electronics, IT and telecom will boost domestic manufacturing and spur exports, the trade deficit will keep growing unless there is a similar scheme for electronics components.

The industry executives said, “The only way to check trade deficit in electronics is to increase domestic value addition and that can happen when more and more components start getting manufactured domestically. This can only happen if a suitable incentive scheme with the right incentives is put in place.”

In the meantime, the non-profit organization EPIC Foundation has developed a 4G educational tablet that is manufactured and designed in India. The United Telecoms (UTL) manufacturer of Jio Phones, and VVDN an electronic manufacturing services company, will produce it domestically. To narrow the digital divide in rural India, the primary target market for the tablets will be the government tenders and the citizen service centres.