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National Policy on Electronics 2019

  Jul 21, 2020

National Policy on Electronics 2019

The Union Cabinet has given its approval to the National Policy on Electronics 2019 (NPE 2019), proposed by the Ministry of Electronics and Information Technology (MeitY).

What does the Policy envision?

 The Policy 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.

The new National Policy on Electronics thus aims to create an ecosystem for the development of the ESDM sector. The host of the policies announced is expected to reduce import dependence and to develop a growth platform for the sector. 

What are the targets set out by the policy?

The policy targets to promote domestic manufacturing and export in the entire value-chain of ESDM for economic development to achieve a turnover of USD 400 billion (approximately INR 26,00,000 crore) by 2025. This will include targeted production of 1.0 billion (100 crore) mobile handsets by 2025, valued at USD 190 billion (approximately INR 13,00,000 crore), including 600 million (60 crore) mobile handsets valued at USD 110 billion (approximately INR 7,00,000 crore) for export. 

Did the National Policy on Electronics, 2012 accomplish its objectives?

The implementation of the Schemes/ Programmes under the aegis of the National Policy on Electronics 2012 (NPE 2012) has successfully consolidated the foundations for a competitive Indian ESDM value chain. NPE 2019 proposes to build on that foundation to propel the growth of ESDM industry in the country. The National Policy of Electronics 2019 (NPE 2019) replaces the National Policy of Electronics 2012 (NPE 2012) 

What are the salient features of the policy?

  1. Create eco-system for globally competitive ESDM sector: Promoting domestic manufacturing and export in the entire value-chain of ESDM.
  2. Provide incentives and support for manufacturing of core electronic components.
  3. Provide special package of incentives for mega projects which are extremely high-tech and entail huge investments, such as semiconductor facilities display fabrication, etc.
  4. Formulate suitable schemes and incentive mechanisms to encourage new units and expansion of existing units.
  5. Promote Industry-led R&D and innovation in all sub-sectors of electronics, including grass root level innovations and early stage Start-ups in emerging technology areas such as 5G, loT/ Sensors, Artificial Intelligence (Al), Machine Learning, Virtual Reality (VR), Drones, Robotics, Additive  Manufacturing, Photonics, Nano-based devices, etc.
  6. Provide   incentives   and   support   for   significantly   enhancing availability of skilled manpower, including re-skilling.
  7. Special thrust on Fabless Chip Design Industry, Medical Electronic Devices Industry, Electronics Industry and Power Electronics for Mobility and Strategic Electronics Industry.
  8. Create Sovereign Patent Fund (SPF) to promote the development and acquisition of IPs in ESDM sector.
  9. Promote trusted electronics value chain initiatives to improve national cyber security profile.

What is the financial support mechanism envisaged under the policy?

Following are the important support mechanisms proposed in the NPE 2019.

Interest subvention:

The interest subvention scheme that is already provided to sectors like agriculture. Here, the government will provide an interest subsidy of 4 per cent on loans upto Rs 10,000 crores. The loan amount should spend on plant and machineries.

Credit Guarantee Fund Scheme

Another incentive under the NPE is the Credit Guarantee Fund Scheme that will provide default guarantee to banks up to RDs 75% of the loan amount on plant and machinery for loans up to Rs 100 crores.

With the Credit Guarantee Fund, small and new investors need not provide any third-party collateral like bank guarantee to secure loans.

Electronics Manufacturing Clusters 2.0

The NPE also upgrades the existing Electronics Manufacturing Clusters scheme into Electronics Manufacturing 2.0

Similarly, the policy also proposes to create fresh industrial clusters to promote full value chain generation. According to the Minster of Electronics and IT, latest technologies such as artificial intelligence, medical/defense electronics and consumer electronics will be a focus of this policy.

Sovereign Patent Fund

Sovereign Patent Fund will be used to upgrade technology and knowledge in this initiative. The objective is to ensure that the chips and components can be made available to Indian firms at low cost. 

What is the implementation strategy for the policy?

The Policy will lead to the formulation of several schemes, initiatives, projects and measures for the development of ESDM sector in the country as per the roadmap envisaged therein. 

What will be the major impact of the policy?

The NPE 2019 when implemented will lead to formulation of several schemes, initiatives, projects, etc., in consultation with the concerned Ministries/ Departments, for the development of ESDM sector in the country.

It will enable flow of investment and technology, leading to higher value addition in the domestically manufactured electronic products, increased electronics hardware manufacturing in the country and their export, while generating substantial employment opportunities.