New Scheme To Double Value Addition In Electronics By 2030

India still relies heavily on imports for small electronic components used in products like cell phones, laptops, and refrigerators. Mostly, these are sourced from countries like China and South Korea. And while exports of finished electronic goods have grown six-fold over the past decade, imports of these critical components have also surged alongside.

MeitY's Rs 22,919 crore scheme is meant to promote the domestic production of ‘passive components’ like resistors, capacitors, ferrites, specialty ceramics, inductors and coils. Anything with a circuit board likely contains some or all of these components. The circuit board would also contain ‘active components’ like transistors, diodes and integrated circuits, but those fall under the scope of the India Semiconductor Mission (ISM), launched in 2021.

When asked about the potential impact of US tariffs on Indian electronics manufacturers, given that the US is one of India's top export destinations, IT Minister Ashwini Vaishnaw declined to comment.

At an earlier press conference, before Trump's 'Liberation Day' tariffs came into effect, he had said that after the US’s reciprocal tariffs, the scheme will be an advantage to Indian manufacturers. The minister did not comment on the ongoing trade negotiations between the US and India.

Made Here, Not Shipped

The big idea behind the scheme is value addition, meaning putting more Made In India components in these devices, instead of relying on imports. The government says this push is crucial, especially as smartphone exports hit Rs 2 lakh crore in FY 2024-25, marking a 57 per cent jump from the previous year. Of this, iPhones alone accounted for Rs 1.5 lakh crore in exports, said Vaishnaw at a press conference.

MeitY expects domestic value addition in electronics to double over the next five years, rising from the current 20 per cent. The minister highlighted local manufacturing by showcasing a prototype laptop made in Manesar. He recalled that when he had earlier shown it to a tech CEO, they had mistaken it for a device made in Taiwan.

The government is also looking to cut back its dependence on critical industrial machinery, adding that the new scheme will support making this machinery right here in India. 

“Just like the Semiconductor Mission got companies like Applied Materials and Lam Research to invest, we’re aiming to do the same for the electronics component space,” he said. 

Big chemical and gas firms like Linde are already setting up shop, and several global players are in talks to join the ecosystem.

The scheme offers three types of incentives: Turnover-linked, capex, and a hybrid of the two. Companies can earn rewards based on increased sales and capital investment, but a portion of the incentive is tied to job creation. If firms don’t meet the employment targets, 1 per cent (for turnover) or 5 per cent (for capex) will be deducted from their incentive.

The scheme is expected to generate employment for about 1 lakh people. Employment generation will be a mandatory requirement for all applicants, including both component manufacturers and capital equipment producers.

The government has also called for public consultation on the guidelines for the scheme. It is expected that the scheme would be up and running by the end of April.