(MENAFN- KNN India) New Delhi, May 27 (KNN) India's Electronics manufacturing industry is advocating for a significant production-linked incentive (PLI) scheme worth Rs 30,000 to Rs 35,000 crore to bolster the production of components and sub-assemblies.
The proposed incentives, along with capital expenditure support, aim to facilitate the burgeoning exports of mobile phones and other electronics products, reported ET.
The India Cellular & Electronics Association (ICEA), representing major smartphone brands and manufacturing companies, has emphasised the necessity of such an incentive scheme to meet the projected surge in demand for electronic components.
According to industry estimates, the component demand is expected to reach USD 75-USD 80 billion by 2026 and an ambitious USD 300 billion by 2032, underpinning the manufacturing of USD 300 billion worth of electronics products by 2026 and USD 1.2 trillion by 2032.
One of the key objectives of the proposed scheme is to enhance domestic value addition in mobile phone manufacturing, elevating it from the current 18 percent to 35-40 percent.
The industry stakeholders have underscored the importance of synchronising component manufacturing with the ongoing development of India's semiconductor ecosystem.
In its submission to the Ministry of Electronics and Information Technology, the industry has advocated for PLI support with a 4-6 per cent incentive structure for manufacturing sub-assemblies such as camera modules, display assemblies, vibrator motors, high-end printed circuit boards, through-hole passive components, and surface-mount components.
The recommended PLI plan spans eight years, with companies granted the flexibility to claim incentives for six years within this period. ICEA has proposed that companies committing a threshold investment of Rs 1,000 crore or more in producing SMD passive components, lithium-ion cells, and high-end PCBs should receive 40 per cent capital expenditure support on an equal basis.
Additionally, the industry has called for an average incentive of 5 per cent over six years to support the production of raw materials and other inputs for components.
Recognising the need to reduce reliance on imports, the industry body has highlighted the urgency of transitioning towards an indigenous semiconductor ecosystem, supported by localised PCBA operations, focused circuit design, and increased value addition in product manufacturing.
ICEA estimates that the component ecosystem would require 2-3 years to commence commercial production. Once established, domestic manufacturing of components should aim to capture 5-10 per cent of global demand within 6-7 years, with international firms invited to secure a significant share in both domestic and global component manufacturing markets.
Furthermore, the industry has proposed a 25 percent capital expenditure support for supply chain ancillary units supporting component manufacturing.
Critical sub-assemblies and components such as connectors, mechanics, vibrator motors, camera modules, display assemblies, and speaker modules should receive a 4-6 per cent incentive tied to incremental sales, according to the recommendations.
To mitigate the high cost of finance in India, the industry has sought a 5 percent interest subsidy for component production on term loans and working capital requirements.
(KNN Bureau)
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