The Indian government is taking significant steps towards establishing a self-reliant electronics industry with its new production-linked incentive (PLI) scheme focused on electronics component manufacturing. This initiative aims to reduce dependence on foreign suppliers like China and Vietnam. This will further enhance the domestic manufacturing capabilities that have been growing under the ‘Make in India’ initiative.
Understanding the PLI Scheme for Large Scale Electronics Manufacturing
The Production Linked Incentive (PLI) Scheme is integral to India’s strategy to become a global hub for Electronics System Design and Manufacturing (ESDM). This is outlined in the National Policy on Electronics 2019 (NPE 2019). This initiative addresses challenges in the electronics sector. These include inadequate infrastructure, high financing costs, and limited R&D, which collectively contribute to a competitiveness gap of around 8.5% to 11%.
Strategic Objectives of the PLI Scheme
The PLI scheme incentivizes manufacturers to upscale operations and align with international standards. This further encourages developments in core components and design innovations. It offers financial incentives based on sales and manufacturing performance. With this, it aims to attract investments and enhance the quality of domestic manufacturing.
Creating an Enabling Environment
By improving the manufacturing ecosystem, the PLI scheme intends to stimulate job creation and skill development. This will further prepare the workforce in advanced manufacturing technologies. This initiative supports India’s vision to reduce import dependency, increase exports, and integrate more deeply into the global supply chain.
Through these measures, the PLI Scheme seeks to mitigate current sectoral disabilities. They also aim to position India as a leader in the global electronics industry, promoting sustainable growth and innovation.
Stakeholder Engagement and Strategic Goals
The IT Ministry has begun soliciting input from various stakeholders to shape this pivotal scheme. The collaboration and input from industry leaders are crucial for setting effective benchmarks that align with national and international market demands. A. Gururaj, Managing Director of Optiemus Electronics Ltd, expressed strong support for this initiative. He stated, “Optiemus Electronics Ltd is committed to work with the government for development of a complete electronics ecosystem in the country. We welcome the government’s proposal to expand the PLI scheme to electronic component manufacturing in the country which will contribute significantly to truly creating an Atmanirbhar Bharat.”
Economic Impact and Job Creation
The implementation of this PLI scheme is expected to have a substantial economic impact. It will help in fostering job creation and enhancing the skill set of the Indian workforce. After the launch of the ‘Make in India’ program by Prime Minister Narendra Modi, the electronics manufacturing sector has seen the creation of nearly 12 lakh new jobs. The industry’s value has surged past $100 billion. The expansion of the PLI scheme is anticipated to further this growth, creating thousands of direct and indirect jobs.
Strengthening Domestic Manufacturing
India’s domestic production capabilities are poised to significantly enhance due to the PLI scheme’s new focus on electronics component manufacturing. This initiative is expected to reduce the nation’s reliance on imports and boost its self-sufficiency in this sector. Avneet Singh Marwah, CEO of Super Plastronics Private Limited (SPPL), underscores the benefits in his statement. He stated, “Currently, we heavily rely on outsourcing key electronic components from various countries.”
With the shift towards in-house manufacturing, Marwah points out two main advantages. He states, “However, with the introduction of in-house manufacturing, we stand to gain two significant advantages: enhanced competitiveness through more competitive pricing and the bolstering of our supply chain infrastructure.”
This development promises to strengthen the competitiveness of Indian manufacturers. It will also solidify the overall supply chain, making the industry more resilient and responsive to market needs.
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Expert Opinions on the PLI Scheme
Industry experts have praised the PLI scheme as a game-changer for the electronics sector. The recent inauguration of a major semiconductor plant in India, followed by similar initiatives, underscores the country’s commitment to strengthening its manufacturing ecosystem. Prabhu Ram, Head of the Industry Intelligence Group at market intelligence firm CMR, remarked, “Expanding the PLI scheme to electronic components manufacturing is a strategic move to address a critical bottleneck in India’s domestic electronics ecosystem – its dependence on foreign suppliers. By incentivising local production, the policy will aim to boost domestic manufacturing capabilities and, over time, create a more resilient end-to-end electronics value chain with robust upstream and downstream capabilities within the country.”
Future Outlook of the PLI Scheme
PLI scheme for electronics component manufacturing is poised to play a pivotal role. This initiative promises to enhance India’s competitive edge in the global market. It also supports the vision of an Atmanirbhar Bharat, fostering an ecosystem of innovation and self-sufficiency in the electronics industry. The focus on developing internal capacities and reducing external dependencies is expected to drive significant economic and technological advancements, securing India’s position as a global leader in electronics manufacturing.