Cabinet Approves National Policy on Electronics (NPE) 2019

· Full Detail only after 5 days as Finance Ministry stamp required

· Emphasis on chipsets

· Manufacture thru ESDM, exports

· Interest subsidy and loan guarantee to push Indian companies

· Sovereign Patent Fund for Chips

· Targets $400bn by 2025

· Mobile Phones account 47.5% of product with 100 cr phones New year

· Export Orientation

· New Cluster Scheme

· Common low cost components to be sold by Govt

Decision

The Union Cabinet on 19 February 2019 gave its approval to the National Policy on Electronics 2019 (NPE 2019), proposed by the Ministry of Electronics and Information Technology (MeitY). The Policy envisions positioning India as a global hub for Electronics System Design and Manufacturing - (ESDM) by encouraging and driving capabilities in the country for developing core components, including chipsets, and creating an enabling environment for the industry to compete globally.

Salient Features of NPE 2019

i. Create eco-system for globally competitive ESDM sector: Promoting domestic manufacturing and export in the entire value-chain of ESDM.

ii. Provide incentives and support for manufacturing of core electronic components.

iii. Provide special package of incentives for mega projects which are extremely high-tech and entail huge investments, such as semiconductor facilities display fabrication, etc.

iv. Formulate suitable schemes and incentive mechanisms to encourage new units and expansion of existing units.

v. Promote Industry-led R&D and innovation in all sub-sectors of electronics, including grass root level innovations and early stage Start-ups in emerging technology areas such as 5G, loT/ Sensors, Artificial Intelligence (Al), Machine Learning, Virtual Reality (VR), Drones, Robotics, Additive Manufacturing, Photonics, Nano-based devices, etc.

vi. Provide incentives and support for significantly enhancing availability of skilled manpower, including re-skilling.

vii. Special thrust on Fabless Chip Design Industry, Medical Electronic Devices Industry, Automotive Electronics Industry and Power Electronics for Mobility and Strategic Electronics Industry.

viii. Create Sovereign Patent Fund (SPF) to promote the development and acquisition of IPs in ESDM sector.

ix. Promote trusted electronics value chain initiatives to improve national cyber security profile.

Background

The implementation of the Schemes/ Programmes under the aegis of the National Policy on Electronics 2012 (NPE 2012) has successfully consolidated the foundations for a competitive Indian ESDM value chain. NPE 2019 proposes to build on that foundation to propel the growth of ESDM industry in the country. The National Policy of Electronics 2019 (NPE 2019) replaces the National Policy of Electronics 2012 (NPE 2012).

Implementation Strategy and Targets

Implementation strategy: The Policy will lead to the formulation of several schemes, initiatives, projects and measures for the development of ESDM sector in the country as per the roadmap envisaged therein.

Targets: Promote domestic manufacturing and export in the entire value-chain of ESDM for economic development to achieve a turnover of USD 400 billion (approximately INR 26,00,000 crore) by 2025. This will include targeted production of 1.0 billion (100 crore) mobile handsets by 2025, valued at USD 190 billion (approximately INR 13,00,000 crore), including600 million (60 crore) mobile handsets valued at USD 110 billion (approximately INR 7,00,000 crore) for export.

Major Impact

The NPE 2019 when implemented will lead to formulation of several schemes, initiatives, projects, etc., in consultation with the concerned Ministries/ Departments, for the development of ESDM sector in the country. It will enable flow of investment and technology, leading to higher value addition in the domestically manufactured electronic products, increased electronics hardware manufacturing in the country and their export, while generating substantial employment opportunities.

NEP 2019 comes with a slew of new incentive schemes including an ‘interest-subvention scheme’, under which the government intends to provide interest subsidy of 4 per cent on loans up to ₹1,000 crore on plant and machinery. For larger loan amounts, the subsidy will be limited to ₹1,000 crore. The Department of Expenditure is being consulted on this issue following completion of stakeholders’ consultation.

Under a new ‘Credit Guarantee Fund Scheme’, the government will create a fund to provide default guarantee to banks up to 75 per cent of the loan amount on plant and machinery for loans up to ₹100 crore. This will eliminate the need for small and new investors to provide third-party collateral, which is required by banks at present.

Further, Electronics Manufacturing Clusters 2.0 will replace the existing EMC scheme. A Sovereign Patent Fund will be launched to acquire IPs for chips and to ship components for some commonly used product IPs, so that they can be made available to Indian entrepreneurs at a very low cost.

“The previous Electronics Policy came in 2012, when there was little electronics manufacturing in the country. The schemes associated with it have now come to a close so we are completely revising it as a policy,” Ravi Shankar Prasad, Minister of Electronics and IT, said here after the Cabinet meeting.

Industry cluster

As part of the new policy, the government is making clusters in which no individual company will manufacture, but a full value chain will be in place. A bigger industry will be supported by smaller industries.

“Latest technologies such as artificial intelligence, medical/defence electronics and consumer electronics will be a focus as part of this policy,” Prasad said, adding that the government is aiming at India achieving a share of 32 per cent of global electronics manufacturing, from 26.7 per cent in 2017-18.

NPE 2019 will also give special thrust on fabless chip design, automotive electronics and power electronics for the mobility and strategic electronics industry.