Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS)

Pin It
Whatsapp

7-Dec-2022: Promotion of SPECS

Government of India’s goal is to make India a significant Electronic System Design and Manufacturing hub in Global Value chain for Electronics as part of its AtmaNirbhar Bharat Economic policies.

As part of this, Government is broadening and deepening the electronics manufacturing ecosystem in the country. To establish India as a global leader in electronics manufacturing, Government of India has launched many flagship schemes which are aimed at “Atmanirbhar Bharat – A self-reliant India” under the aegis of National Policy on Electronics 2019 (NPE 2019). The Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) is a step in this direction. It was notified on April 01, 2020 and provides financial incentive of 25% on capital expenditure for the identified list of electronic goods that comprise downstream value chain of electronic products, i.e., electronic components, semiconductor / display fabrication units, ATMP units, specialized sub-assemblies and capital goods for manufacture of aforesaid goods. The scheme is open to receive applications till 31.03.2023. As on November 30, 2022, thirty-two (32) applications with total project cost of Rs.11,130 crore. The total employment generation potential of the approved applications is 32,457 (Thirty-two thousand Four hundred and fifty-seven).

Government of India has taken strategic steps and initiatives to broaden and deepen the country’s electronic manufacturing ecosystem. At this juncture, National Policy on Electronics 2019 (NPE 2019) 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. Apart from SPECS, Government of India has launched many flagship schemes, the details of which are given below:

Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing was notified on 1st April, 2020. The Scheme extends an incentive of 6% to 4% on incremental sales (over base year) of goods under target segments that are manufactured in India to eligible companies, for a period of five (5) years.

Sixteen (16) companies have been approved under the first round of PLI Scheme for Large Scale Electronics Manufacturing.

After the success of the First Round of PLI Scheme in attracting investments in mobile phone and electronic components manufacturing, Second Round of the PLI Scheme for Large Scale Electronics Manufacturing was launched on 11.03.2021 for incentivising Electronic Components. Under the Second Round, incentives of 5% to 3% shall be extended on incremental sales (over base year i.e., FY 2019-20) of goods manufactured in India and covered under the target segment, to eligible companies, for a period of four (4) years. Sixteen (16) companies have been approved under the second round of PLI Scheme for Large Scale Electronics Manufacturing.

In furtherance of the vision of AatmaNirbhar Bharat, the Cabinet approved the comprehensive program for the development of a sustainable semiconductor and display ecosystem in the country with an outlay of ₹ 76,000 crore (>10 billion USD). The program will usher in a new era in electronics manufacturing by providing a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design. Under the aforesaid program, following four schemes have been introduced:

  1. Modified Scheme for setting up of Semiconductor Fabs in India - The Scheme extends a fiscal support of 50% of the project cost for setting up of Silicon CMOS based Semiconductor Fab in India.
  2. Modified Scheme for setting up of Display Fabs in India- Scheme extends fiscal support of up to 50% of Project Cost for setting up of Display Fabs in India.
  3. Modified Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab / Discrete Semiconductors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities in India – The scheme extends a fiscal support of 50% of the Capital Expenditure
  4. Design Linked Incentive (DLI) Scheme - The scheme provides “Product Design Linked Incentive” of up to 50% of the eligible expenditure subject to a ceiling of ₹15 Crore per application and “Deployment Linked Incentive” of 6% to 4% of net sales turnover over 5 years subject to a ceiling of ₹30 Crore per application.

As laid down in the scheme guidelines the incentive will be available to the approved projects under the scheme for investment made within 5 years from the date of acknowledgement of the application subject to capital expenditure meeting the minimum threshold value   and commencement of commercial production, and compliance to other terms and conditions stipulated in Scheme / Guidelines / Approval Letter.

21-Mar-2020: Cabinet approves Scheme for Promotion of manufacturing of Electronic Components and Semiconductors

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has approved to offer financial incentive of 25% of capital expenditure for the manufacturing of goods that constitute the supply chain of an electronic product under the Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS).        

The scheme will help offset the disability for domestic manufacturing of electronic components and semiconductors in order to strengthen the electronic manufacturing ecosystem in the country.

Financial Implications: The total cost of the scheme is approximately Rs.3,285 crore, which includes the incentive outlay of approximately Rs.3,252 crore and the administrative expense to the tune of Rs.32 crore.

Benefits:

  1. The proposal when implemented will lead to the development of electronic components manufacturing ecosystem in the country. Following are the expected outputs/outcomes in terms of measurable indicators for the scheme:
  2. Development of electronic components manufacturing ecosystem in the country and deepening of Electronics value chain.
  3. New investments in Electronics Sector to the tune of at least Rs. 20,000 crore.
  4. Direct employment of approximately 1,50,000 is expected to be created in the manufacturing units supported under the scheme, including indirect employment of about three times of direct employment as per industry estimates. Thus, total employment potential of the scheme is approximately 6,00,000.
  5. Reducing dependence on import of components by large scale domestic manufacturing that will also enhance the digital security of the nation.

Background: The vision of National Policy on Electronics 2019 (NPE 2019) notified on 25.02.2019 is to position 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.

A vibrant electronic components manufacturing ecosystem is vital for the overall long-term and sustainable growth of electronics manufacturing in India and essential to achieve net positive Balance of Payments (BoP).

It is, therefore proposed to provide an incentive of 25% on capital expenditure on plant, machinery, equipment, associated utilities and technology, including for Research & Development to the industrial units making investment for manufacturing of electronic components, semiconductors, ATMP, specialized sub-assemblies and capital goods for these items, in the specified categories. This will cater to all segments of electronics manufacturing such as Mobile Electronics, Consumer Electronics, Industrial Electronics, Automotive Electronics, Medical Electronics, Strategic Electronics, Power Electronics, Telecom Equipment, Computer Hardware etc.