Key Initiatives in Electronic System Design and Manufacturing (ESDM)

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Key Initiatives in Electronic System Design and
Manufacturing (ESDM)
16th January, 2013

• Department of Electronics Information
  Technology (DeitY)

6 Electronics Niketan CGO Complex New Delhi
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National Policy on Electronics
Union Cabinet has approved the National Policy on
Electronics (NPE) 2012 on October 25, 2012
NPE Vision To create a globally competitive
electronics design and manufacturing industry to
meet the country's needs and serve the
international market

• NPE Goals for 2020
• Attract an investment of US 100 bil
• Reach a turnover of US 400 bil
• Create an employment of 28 mil
• Enhance exports from US 8 bil to US 80 bil
• Grow the chip design/ embedded software industry
  to US 55 bil

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Major initiatives under policy

• Modified SIPS (M-SIPS)
• Electronics Manufacturing Clusters (EMC)
• Preferential Market Access (PMA)
• Semiconductor Wafer Fab
• Electronic Development Fund

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Modified Specisl Incentive Package
Scheme (Notified vide notification no. 175 dated
27-07-2012 in Gazette of India)
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OBJECTIVES

• To attract investments into the ESDM sector
• To provide a level-playing field and achieve
  competitiveness in the global market.
• To partly offset the disabilities being faced by
  ESDM industry in India like high transactional
  costs, complex administrative processes and
  infrastructural deficiencies.

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Applicability

• Provide subsidy for investments all verticals of
  the ESDM sector within notified Electronic
  Manufacturing Clusters (EMCs) including
• TELECOM EQPTS INCLUDING MOBILE SETS
  OPTO-ELECTRONICS
• IT HARDWARE
  BIO-METRIC/ IDENTITY DEVICES
• CONSUMER ELECTRONICS POWER
  SUPPLY FOR ESDM PRODUCTS
• MEDICAL ELECTRONICS
  SEMICONDUCTOR WAFERING
• SOLAR PHOTOVOLTAICS
  SEMICONDUCTOR CHIPS COMPONENTS
• FABS FOR ESDM PRODUCTS LEDS, LCDS
• AVIONICS ELECTRO-MECHANICAL COMPONENTS
• NANO-ELECTRONICS E-WASTE
  PROCESSING
• AUTOMOTIVE ELECTRONICS ELECTRONICS
  MANUFACTURING SERVICES

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Financial Incentives

• Capex subsidy 25 in non-SEZ and 20 within SEZ
  for 10 years.
• Reimbursement of CVD/excise on capital equipment
  for non-SEZ units
• Reimbursement of central taxes and duties (like
  custom duties, excise duties and service tax) for
  10 years in select high- tech units like fabs,
  Semiconductor Logic and Memory chips, LCD
  fabrication.
• (Incentives to be released after end of financial
  year in which total investment exceeds threshold
  value.)

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Applicability contd.

• M-SIPS is for state-of-the-art technologies.
• Investments in new ESDM units
• Investments in expansion of capacity
  /modernization and diversification of existing
  ESDM units(increase in capital investment in
  plant and machinery should not be less than 25)
• All stages of the value-chain involved in the
  development of electronics products and
  accessories starting from raw materials( it
  includes design, manufacturing, testing,
  packaging etc).

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Applicability contd.

• Incentives available to units within notified
  Electronic Manufacturing Clusters (EMCs)
• Incentives available for 10 years from date of
  approval of project by Govt. of India
• Investment threshold limits from Rs. 5000 crore
  for Memory Fab to Rs. 1 crore for Mobile Phone
  and IT accessories. All expenditure incurred
  towards the project will be considered for the
  purpose of achieving threshold value.For IT
  products, the investment threshold is 10 Crore
• Open for 3 years from date of notification in
  official Gazette of India i.e. till 26-07-2015

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How to Apply

• Application to be made either by a legal entity
  or consortium of legal entities registered in
  India, for approval of a project under the scheme
• In the case initial Application is made jointly
  by more than one legal entities, each one of them
  should sign the application
• The project proposed under the scheme may include
  one or more electronic products, however
  applicable threshold would be sum of the
  thresholds required to manufacture each of the
  products separately.
• An applicant may submit one or more than one
  Initial Applications under the scheme
• Initial application may be made both for the new
  units and for the expansion units
• The project proposed in the initial application
  may include multiple manufacturing facilities at
  one or more locations.

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How to Apply (contd.)

• The project proposed in the initial application
  may be implemented in one or more phases.
• 1. If project is to be implemented in one phase,
  FC ( Financial Closure) documentation of
  complete project needs to be submitted
• 2. If project is to be implemented in more than
  one phase,
• - Complete project would be considered
  for approval
• - Phase of the project for which FC is
  furnished will be
• considered for
  implementation and incentives, however it
  should not be less than 20 of the complete
  project.
• - Approval of project will allow applicant to
  submit Follow up
• applications for implementation of
  subsequent phase of the
• project, however an applicant can
  submit maximum of 4 follow-up applications in
  addition to the initial application.
• Financial Closure (FC) of at least threshold
  value and at least one phase of the project (in
  the case of multiphase project) to be submitted
  at the time of Initial Application

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• Financial Closure document It consists of -
• a) Firm loan agreement for debt portion of the
  investment
• b) Legally binding commitment from equity
  providers or
• c) Legally binding commitment of funding in case
  of internal
• accruals.
• Initial Application to be made to Nodal Officer
  (M-SIPS), DeitY. The details can be viewed on
  DeitY website.
• A non-refundable application fee will be payable
  for each of the initial application and follow-up
  application.

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APPLICATION FEE
A non-refundable application fee will be payable
for each of the initial application and follow-up
application ( Details can be viewed on
http//deity.gov.in/content/electronic-hardware)
Total Project cost proposed and submitted along with the initial application (in INR) INITIAL APPLICATION FEE (IN INR)
gt 1000 crores 1,00,000/-
gt 100 crores and lt 1000 crores 50,000/-
gt 10 crores and lt 100 crores 25,000/-
gt 10 crores 10,000/-
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Approval process
TEC
Nodal Officer(MSIPS)
PMU
Appraisal Committee
Approval
3RD Party Appraisal
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APPROVAL TIMELINES

• Receipt of completed application to DeitY T
  (Date)
• Preparation of appraisal report by PMU T 30
• Internal appraisal by DeitY T 45
• Placing appraisal report before AC T 52
• Circulation of MoM of AC within 7 days of AC
  meeting
• Preparation and circulation of SFC/EFC note
  Within 7 days of minutes of AC meeting
• (Where, T is the date of submission of complete
  application.)

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• For detailed procedure, terms and condition
  please visit
• http//deity.gov.in/content/electronic-hardware
• Guidelines for the Operation of the Modified
  Special Incentive Package Scheme for Electronics
  System Design and Manufacturing Sector
• (Oct 7, 2012) (216 KB)

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Electronics Manufacturing Clusters
Scheme Notified on October 22, 2012
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Electronic Manufacturing Clusters (EMC) Scheme

• The scheme aims to provide assistance for
  improving infrastructure facilities and common
  facilities in Electronic Manufacturing Clusters.
• Assistance available for Brownfield EMCs is
  restricted to 75 of project cost subject to a
  ceiling of Rs 50 crores.
• For Greenfield EMCs, the assistance is 50 of the
  project cost, with a ceiling of Rs 50 crores for
  the first 100 acres.

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Brownfield EMCs for M-SIPS

• A contiguous area wherein the collocated
  Electronics System Design and Manufacturing
  (ESDM) units have potential synergies and
  positive externalities.
• Units within a proposed Brownfield EMC may
  produce same or related ESDM products or services
  and/or use a similar input or share similar
  processes which help create synergies and
  positive externalities across them

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• For detailed procedures, terms and condition,
  please visit
• http//deity.gov.in/sites/upload_files/dit/files
  /Brownfield20Cluster20Guidlines_Approved-9-1-13.
  pdf
• All applications for notification of Brownfield
  EMC shall be submitted to
• Nodal officer (M-SIPS)
• Department of Electronics and Information
  Technology (DeitY), Electronics Niketan, 6, CGO
  Complex Lodhi Road, New Delhi-110003

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Preferential Market Access Notified on 15-02-2012
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Features

• A policy for providing preference to notified
  domestically manufactured electronic goods for
  the following two categories
• For government procurement
• Procurements of Managed Service Providers which
  have security implications.
• Preference subject to matching L1 and satisfying
  technical specifications
• Domestic value addition in terms of BOM from
  domestic manufacturers 25 in Year 1 to 45 in
  Year 5
• Update Railtel in its latest tender has
  provided preference to domestically manufactured
  electronic goods

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• In furtherance to the said policy, the Department
  of Telecommunications has notified, on October 5,
  2012, a list of 23 major telecom products for
  which preference needs to be provided in
  Government procurement. All Ministries/Departments
  of Government of India have been advised to
  ensure that the said preference be granted while
  procuring these telecom products.
• Department of Electronics and IT has also
  notifying IT products including desktop
  computers, laptops, tablets, inkjet printers,
  smart cards for providing preference to domestic
  manufacturers under the said policy.
• For detailed terms and conditions, please visit
  DeitY website.
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