Mar 29, 2025

Cabinet greenlights Rs 23,000 crore e-parts production scheme SECTIONS ETtech Rate Story Synopsis India's Rs 23,000-crore electronics component manufacturing (ECM) scheme aims to boost domestic production, create jobs, and integrate with global value chains. Over the next six years, it will focus on passive components, sub-assemblies, and capital goods. The scheme offers targeted incentives based on jobs, turnover, and capital expenditure to stimulate growth. Agencies The Cabinet has approved a Rs 23,000-crore programme to strengthen the electronics manufacturing supply chain. India is looking to grab a bigger share of the market as companies opt for ‘China Plus One,’ as well as create jobs. The much-anticipated electronics component manufacturing (ECM) scheme is a move to increase domestic value addition and integrate with global value chains. It will be spread over six years and is expected to generate investment worth Rs 60,000 crore. “We are already making very good progress in the semiconductor part of the value chain,” said Ashwini Vaishnaw , minister for electronics and IT, railways and information and broadcasting, referring to the production-linked incentive (PLI) scheme. “We have had super success in PLI-based finished products manufacturing. Now, we are covering sub-assemblies and bare components.” Employment, turnover, capex criteria The ECM scheme is expected to result in Rs 4.57 lakh crore of production and generate 91,600 direct jobs, apart from indirect employment opportunities. Live Events It provides differentiated incentives tailored to overcome specific disabilities for various categories of components and sub-assemblies so they can acquire technological capabilities and achieve economies of scale. Discover the stories of your interest It has a one-year gestation period and the incentives are split across three different sets of criteria. For some companies, the target will be related to jobs and for others, it will be linked to turnover. It will be linked to capital expenditure incurred for those that require heavy investment. The details are expected over the next few weeks, Vaishnaw said. The scheme will focus on passive component and sub-assembly manufacturing in India, especially capital goods or machinery — a critical need for self-reliance in manufacturing, said Vaishnaw. It will also complement active component manufacturing under the Rs 76,000 crore India Semiconductor Mission (ISM). Sectoral reaction The industry welcomed the programme and said it will not only help with value addition but also lower costs. “When it comes to the main objective of deepening the value addition, this is a significant initiative,” said Atul Lall, chief executive and managing director of Dixon Technologies , among the biggest homegrown contract makers. “Components comprise 45-50% of the bill of material, so from Dixon's perspective, we were keenly awaiting this.” By supporting the development of essential chip components, compound semiconductors and advanced packaging technologies, the policy will help establish a more resilient and globally competitive supply chain, said Hitesh Garg, India managing director of NXP Semiconductors. “For the industry, this move signals a strong commitment to positioning India as a key player in the global ESDM (electronics system design and manufacturing) landscape,” he said. “It will accelerate innovation across automotive, industrial and (Internet of Things) IoT applications, ensuring India is a significant contributor to next-generation technology.” Josh Foulger, president of electronics at contract maker Zetwerk, called it an “incredible” step towards truly strengthening the ESDM ecosystem. “It will get India on a track to be very competitive to serve global value chains,” he said. “I think it will be very successful because when you're trying to serve the India and the India-plus journey, you have to have a local supply for enabling quicker time to market and quicker time for production — just in time, for instance. Both these things get accelerated and then companies can do global deliveries effectively out of India without carrying huge inventories, or getting delayed product ramp-ups, and so on.” He said this move gives India the opportunity to be competitive on the total cost of goods. “It’s wonderful to see the government incentivise and take care of any short-term and mid-term cost disabilities we may have,” Foulger said. “This will definitely enable value addition improvement. In the next 24-30 months, we will start to see an uptick.” Three heads Vaishnaw cited the example of a printed circuit board (PCB) to explain the benefits of a scheme that takes into account the complex and interconnected nature of key electronic components. A PCB has multiple layers, with many devices running on it— a CPU, capacitors, inductors, resistors, a battery pack, heat sink and multiple other connectors. “The manufacturing of all these (components) will now happen in the country. This will significantly improve value addition that we get,” Vaishnaw said. Under the scheme, display and camera module sub-assembly will receive a turnover-linked incentive. Similarly, bare components like non-surface mount devices (non-SMD) passive components for electronic applications, electro-mechanicals, multi-layer PCB, Li-ion cells for digital applications (excluding storage and mobility), enclosures for mobile, IT hardware products and related devices will also get turnover linked incentives. Selected bare components like high-density interconnect, modified semi-additive process, flexible PCB as well as SMD passive components will get hybrid incentives. Parts used in manufacturing of sub-assembly and bare components, as well as capital goods used in electronics manufacturing — including their sub-assemblies and components — will be eligible for capex incentives. Read More News on