Impact of pandemic on supply chain is evident in every sector and it is causing governments to boost local manufacturing capabilities. In India, this shift is more pronounced in the fields of electronics, medical devices, and pharmaceuticals. Electronic equipments market in India comprises a huge import from China. With the disruption of supply chain, India’s dependence on Chinese suppliers has manifested itself in an unimagined way. Electronics import in India is 10-11 percent of its total imports. Out of the total imports from China, 36 percent consists of electrical equipment, telecom devices, audio and video recorders.
To address this issue, central government has announced production linked incentive schemes and localization requirements in public procurement of medical equipments, pharmaceutical devices and electronics. The schemes are aimed at giving a much needed fillip to the manufacturing sector. The domestic
electronics manufacturing lags behind the competition by a long way. The sector is impaired with lack of requisite infrastructure, exorbitant cost of finance, inadequate availability of power, weak design capabilities and less focus on R&D and skill development. Although the National Policy on Electronics (NPE 2019) aims to position India as a global hub for Electronics System Design and Manufacturing (ESDM), the reform on the ground needs to gain momentum to accomplish the goal. A support system needs to be developed to give a boost to development of core components and create a conducive environment for the industry to thrive.
Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing provides incentive to ramp up domestic manufacturing and rope in investors in manufacturing of mobile phone and its components. The scheme is expected to strengthen electronics manufacturing in India and establish the country in the global market as well. Pankaj Mohindroo, Chairman, India Cellular and Electronics Association (ICEA) said that the scheme is a first-of-its-kind initiative undertaken since independence, wherein a PLI is put into effect across domestic and global supply arena. “We are certain that the Production Linked incentive, electronic manufacturing cluster scheme and especially the SPECS (Scheme for Promotion of Manufacturing of Components and Semiconductors) scheme that helps overcome disabilities of manufacturing electronic components in India, will provide the needed impetus to increase the manufacturing capacity of the country," said Muralikrishnan B, COO, Xiaomi India.
The scheme will offer an incentive of 4-6 percent on incremental sales of goods manufactured in India and will be covered under target segments to eligible companies for five consecutive years after the defined base year. Starting off, the scheme will be open for a period of four months which may be extended later.