I. Preliminary
The National Policy on Electronics 2019 (“Policy”)[1] was released by the Ministry of Electronics and Information Technology (“MeitY”)[2] on 25.02.2019. The Policy, which recognises the electronics industry as the “world’s largest and fastest growing industry”[3], seeks to “position India as a global hub for Electronics System Design and Manufacturing (“ESDM”) by […] developing core components […] and creating an enabling environment for the industry to compete globally”. [4]
II. Mission
- The overarching mission of the Policy has been crystallised below:
- Promotion of domestic manufacturing and reduction of imports.[5]
- Integration of India’s electronics hardware manufacturing sector with global value chains.[6]
- Development of capacities for manufacturing in all sub sectors of electronics.[7]
- Incentivising startups focused on emerging technology.[8]
- Promotion of ease of manufacturing through fiscal incentives.[9]
- Protection of domestic ESDM industry from dumping of electronics goods.[10]
- Promotion of research and development.[11]
- Facilitation of the setting up of global manufacturing bases for components and sub-assemblies in India.[12]
III. Objectives
In order to achieve its mission, the Policy lays down clear objectives. These are as follows:
a. Turnover of USD 400 billion has been set as a target for the ESDM industry for 2025. This is to include the production of 1 billion mobile handsets by 2025, valued at USD 190 billion of which 600 million handsets worth USD 110 billion are earmarked for export.[13]
b. Ease of doing business must be improved for the ESDM industry.[14]
c. Research, development and innovation in electronics are to be encouraged.[15]
d. A comprehensive ecosystem must be created for start-ups working on emerging technologies, including 5G, internet of things, machine learning, drones, robotics, additive manufacturing, phonotics and nano-based devices to encourage them to develop “real-life”[16] applications of such technologies in agriculture, defence, health, cyber security amongst others.[17]
e. Availability of skilled manpower in the ESDM sector must be incentivised.[18]
f. Fiscal incentives and support must be provided to encourage export-led growth, including enhancing economies of scale in electronics manufacturing.[19]
g. Core competencies must be developed in all sub sectors of electronics, including electronic components, telecommunication and broadcasting equipment, medical electronics amongst many others.[20]
h. India must become a global leader in the Electronics Manufacturing Services (“EMS”) segment by progressive value addition in manufacturing of electronic products.[21]
i. Policy support and incentives must be provided for capital intensive projects.[22]
j. Indigenisation in microchips used by strategic and critical infrastructure sectors such as defence, space and atomic energy must be encourage.[23]
k. Specialised governance structures for the ESDM sector are to be created.[24]
l. Loans for setting up or expanding electronics manufacturing units must be facilitated.[25]
m. Research, innovation and support to the industry in areas of packaging, interconnects and micro photonics must be promoted to counter the problems posed by the continued use of silicon in equipment.[26]
n. Transfer of technologies must be incentivised for core technologies.[27]
o. Research, innovation and support in green processes, including e-Waste management, citizen engagement programmes and e-Waste recycling must be promoted.[28]
IV. Strategy
The strategy section provides the blue print of the initiatives and interventions which the MeitY will take in collaboration with concerned ministries/departments to achieve the goals mentioned under the ‘objectives’ section. States may also play an important role in implementing these strategies, as they have been encouraged to play a proactive role in electronics manufacturing, and have been directed to create institutional mechanisms to implement the schemes/programmes under the Policy.
As per the Policy, MeitY shall facilitate initiatives on the measures listed below:
a. Ecosystem for a globally competitive ESDM sector:
This includes providing tax benefits[29], exploring defence offsets to promote component manufacturing,[30] and modifying or replacing the Electronics Manufacturing Clusters (“EMC”) scheme to attract investments in the complete value chain of the identified verticals.[31] The Policy further suggests exemptions from import duty on identified capital equipment[32] to promote domestic manufacturing. The Policy gives an impetus to ‘high performance computing’ capabilities[33] and advocates supplying electronic units/systems for national critical infrastructure from domestic industry.[34]
b. Developing and mandating standards:
The Policy advocates the creation of a framework for developing standards based on global benchmarks for the electronics industry[35] and mandating compliance through the MeitY.[36] It also stresses on creating domestic electronics’ testing capacities.[37]
c. Ease of doing business:
The Policy suggests strengthening and leveraging Invest India[38] and the National Investment Promotion and Facilitation Agency[39] to facilitate investment in India and coordinate with government agencies on behalf of investors till they become functional.[40]
d.Industry led R&D and innovation:
The Policy recommends the creation of a Sovereign Patent Fund (“SPF”)[41] to promote intellectual properties[42] in the ESDM sector and make such patents available to the industry.[43] The Policy provides an impetus to emerging technology such as 5G, artificial intelligence, internet of things, virtual reality[44], as well as strategic electronics, defence and medical electronics.[45] Research and development is also encouraged through “Chairs” [46] for research in premier institutes,[47] incubation centres[48], academia and freelancer-led innovation.[49]
e. Human resource development:
This focuses on skilled manpower development for emerging technologies and strategic electronics.[50] The Policy also talks about a skilled manpower/research base at the Post Graduate/Ph.D. level to work in emerging technologies.[51] The Policy also talks about sending Post Graduate/Ph.D. scholars on foreign deputation for a period of 2 years to carry out research, subject to serving in India for the next 5 years.[52]
f. Export promotion:
The Policy envisages a package of promotions to develop exports in electronics goods.[53]
g. Trusted electronics value chain:
The Policy advocates the creation of trusted electronics value chain initiatives to improve cyber security, contribute to national defence and critical national infrastructure.[54]
h. Cyber security:
The Policy calls for the development of adequate testing facilities[55] and the promotion of secure chips to reduce cyber security risks.[56] The Policy seeks to engage the start-up ecosystem to develop cyber security products.[57]
i. Promotion of Electronics Components Manufacturing Ecosystem:
The Policy calls for incentives to support the manufacturing of core electronic components, lithium-ion cells, optical fibre, assembly-testing-marking-packaging (“ATMP”) of semi-conductors amongst other products.[58]
j. Mega projects:
This calls for incentives for mega projects entailing high investment[59] and investment in mega facilities abroad.[60]
k. Preferential market access:
The Policy calls for leveraging the Government e-Market Place (“ATMP”)[61] and the Public Procurement (Preference to Make in India) Order 2017[62] to create a market for electronic and cyber security products.
l. Developing Core competencies in all sub-sectors:
The Policy argues for special support for developing core competencies in the following strategic sub-sectors:
- Fabless chip design industry,[63]
- Medical electronics devices industry,[64]
- Automotive electronics industry and power electronics for mobility,[65]
- Strategic electronics industry (such as defence, atomic energy, space, railways, telecommunications etc.).[66]
m. Electronics Manufacturing Services (EMS):
The Policy advocates the promotion of certain activities to create the requisite component manufacturing eco-system in India such as, engineering and design[67] and assembly of Printed Circuit Boards (“PCBs”),[68] functional testing[69] and maintenance services[70] for PCBs.
n. Promotion of ATMP:
ATMP is to be promoted for certain semiconductor ICs, including memory chips, on security grounds.[71]
o. Others:
Certain other measures have been encouraged, such as warehousing facilities for components and raw materials,[72] mining or acquiring mines of rare earth metals in foreign countries required for electronic manufacturing.[73] The Policy also proposes to develop an index for indicating status and growth of the electronics manufacturing industry in various states.[74]
[1] The National Policy on Electronics, 2019, available at https://meity.gov.in/content/notification-national-policy-electronics-2019-npe-2019, last accessed on 01.03.2019.
[2] Ministry of Electronics and Information Technology, available at https://meity.gov.in/, last accessed on 01.03.2019.
[3] Page 1 of NPE.
[4] Vision, Page 5 of NPE.
[5] Para 3.1, Page 5 of the NPE.
[6] Para 3.2, Page 5 of the NPE.
[7] Para 3.3, Page 6 of the NPE.
[8] Para 3.4, Page 6 of the NPE.
[9] Para 3.5, Page 6 of the NPE.
[10] Para 3.6, Page 6 of the NPE.
[11] Para 3.7, Page 6 of the NPE.
[12] Para 3.8, Page 6 of the NPE.
[13] Para 4.1, Page 6 of the NPE.
[14] Para 4.2, Page 6 of the NPE.
[15] Para 4.3, Page 6 of the NPE.
[16] Para 4.4, Page 7 of the NPE.
[17] Para 4.4, Page 7 of the NPE.
[18] Para 4.5, Page 7 of the NPE.
[19] Para 4.6, Page 7 of the NPE.
[20] Para 4.7, Page 7 of the NPE.
[21] Para 4.8, Page 7 of the NPE.
[22] Para 4.9, Page 7 of the NPE.
[23] Para 4.10, Page 7 of the NPE.
[24] Para 4.11, Page 7 of the NPE.
[25] Para 4.12, Page 8 of the NPE.
[26] Para 4.13, Page 8 of the NPE.
[27] Para 4.14, Page 8 of the NPE.
[28] Para 4.15, Page 8 of the NPE.
[29] Para 5.1.3, Page 9 of the NPE.
[30] Para 5.1.5, Page 9 of the NPE.
[31] Para 5.1.6, Page 9 of the NPE.
[32] Para 5.1.7, Page 9 of the NPE.
[33] Para 5.1.8, Page 9 of the NPE.
[34] Para 5.1.13, Page 9 of the NPE.
[35] Para 5.2, Page 10 of the NPE.
[36] Para 5.4, Page 10 of the NPE.
[37] Para 5.5, Page 10 of the NPE.
[38] Invest India, available at https://www.investindia.gov.in/about-us, last accessed on 01.03.2019.
[39] Investment Promotion and Facilitation Agency, available at https://www.investindia.gov.in/about-us, last accessed on 01.03.2019.
[40] Para 5.6, Page 10 of the NPE.
[41] Para 5.7.5, Page 10 of the NPE.
[42] Para 5.7.6 and 5.7.7, Page 10 of the NPE.
[43] Para 5.7.4, Page 10 of the NPE.
[44] Para 5.7.1, Page 10 of the NPE.
[45] Para 5.7.1, Page 10 of the NPE.
[46] Para 5.7.1, Page 11 of the NPE.
[47] Para 5.7.1, Page 11 of the NPE.
[48] Para 5.7.2, Page 11 of the NPE.
[49] Para 5.8, Page 12 of the NPE.
[50] Para 5.9.3, Page 13 of the NPE.
[51] Para 5.9.4, Page 13 of the NPE.
[52] Para 5.9.5, Page 13 of the NPE.
[53] Para 5.10, Page 13 of the NPE.
[54] Para 5.11, Page 14 of the NPE.
[55] Para 5.13, Page 14 of the NPE.
[56] Para 5.15, Page 14 of the NPE.
[57] Para 5.16, Page 14 of the NPE.
[58] Para 5.17, Page 14 of the NPE.
[59] Para 5.18, Page 14 of the NPE.
[60] Para 5.19, Page 14 of the NPE.
[61] Para 5.21, Page 14 of the NPE.
[62] Para 5.20, Page 14 of the NPE.
[63] Para 5.22.1, Page 15 of the NPE.
[64] Para 5.22.2, Page 16 of the NPE.
[65] Para 5.22.3, Page 17 of the NPE.
[66] Para 5.22.4, Page 18 of the NPE.
[67] Para 5.23.1, Page 19 of the NPE.
[68] Para 5.23.2, Page 19 of the NPE.
[69] Para 5.23.3, Page 19 of the NPE.
[70] Para 5.23.4, Page 19 of the NPE.
[71] Para 5.24, Page 19 of the NPE.
[72] Para 5.26, Page 19 of the NPE.
[73] Para 5.27, Page 19 of the NPE.
[74] Para 5.29, Page 19 of the NPE.
