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ELECTRONICSYSTEMS

SUMMARY
TheelectronicsmarketofIndiaisoneofthelargestintheworldandisanticipatedtoreachUSD400billionby
2020.
SectorisexpectedtogrowataprojectedCAGRof26%fortheperiod20142020.(CAGRCumulativeannual
growthrate)
Indiahasthe4thLargestStartupecosystemintheworld.
SeveralgovernmentdriveninitiativesandincentiveslikeElectronicsDevelopmentFund(EDF),Electronics
ManufacturingClusters(EMCs)scheme,NationalKnowledgeNetwork&NationalOpticalFibreNetwork.
100%FDIisallowedthroughautomaticroute(49%throughautomaticrouteinstrategicdefenceelectronics
sector).

REASONSTOINVEST
IndianmarketsizeisexpectedtoreachUSD400Billionby2020.
ElectronicManufacturingServices(EMS)industryisexpectedtobeasignificantcontributortotheentire
industrysdevelopment.
Indiahasalargepoolofskilledmanpowerandhasthethirdlargestpoolofscientistsandtechniciansintheworld.
StrongdesignandR&Dcapabilitiesinautoelectronicsandindustrialelectronics.
Thegovernmentispromotingdevelopmentofelectronicsmanufacturingclustersthroughoutthecountryto
provideworldclassinfrastructureandfacilities.
ElectronicsIndiaB2BPlatform,whichhelpsvarioustechnologyplayerstoexplorepotentialsynergeticpartners
fortechnologytransferandjointventuresforelectronicsmanufacturing
65%ofthecurrentdemandforelectronicproductsismetbyimportswhichpresentsanopportunityforimport
substitution.
MajorgovernmentinitiativeslikeDigitalIndiaandMakeinIndiaandsupportivepoliciesincludingfavourable
FDIpoliciesforelectronicsmanufacturing.

STATISTICS

1.TheelectronicsmarketofIndiaisoneofthelargestintheworldandisanticipatedtoreachUSD400billionin
2020.Themarketisprojectedtogrowatacompoundannualgrowthrate(CAGR)of26%percentduring2014
2020.
2.ThesectorcomprisesofConsumerElectronics,IndustrialElectronic,ElectronicComponents,Strategic
Electronics,SemiconductorDesignandElectronicManufacturingServices.
3.Top10electronicproductsbytotalrevenue:mobilephones,flatpaneldisplayTVs,notebooks,desktops,digital
cameras,inverters/UPS,memorycards/USBdrives,EMS/LCDmonitorsandservers.
4.30electronicsproductsnotifiedforsafetystandards(MeitYcompulsoryregistrationorder2014)
5.ExpectedmarketsizeformajorelectricssubsectorsinIndiaby2020:
TelecomEquipment(USD34Billion).
Laptops,Desktops,Tablets(USD34Billion).
LED(USD35Billion).
ConsumerElectronics(USD29Billion).
SetTopBoxes(USD10Billion).
AutomotiveElectronics(USD10Billion).
MedicalElectronics(USD8.5Billion).

GROWTHDRIVERS

1.Hugedomesticdemandandrisingdisposableincome.Alsothereisahugeconsumptionofelectronicsproducts
intheMiddleEastandinemergingmarketssuchasNorthAfricaandLatinAmerica.
2.Risingmanufacturingcostsinothermajormanufacturingeconomies.
3.USD15billionmarketforInternetofThings(IoT)by2020
4.4thLargestStartupecosystemglobally.
5.FavourablegovernmentPolicies:
ModifiedSpecialIncentivePackageScheme(MSIPS)(USD19BillioninvestmentproposalstillAugust
2016)
ElectronicsManufacturingClustersScheme(EMC).
SkillDevelopmentSchemes.
ExistingR&DcapabilitiescanbeencouragedtodevelopMadeinIndiaproductsandgeneratelocalIP.
CentreofExcellenceforIoTwassetupatNASSCOMBengalurutopromotestartupinIoT.

FDIPOLICY
100%ForeignDirectInvestment(FDI)isallowedundertheautomaticrouteintheESDMsectorandissubjectto
allapplicableregulationsandlaws.
Incaseofelectronicsitemsfordefence,FDIupto49%isallowedunderautomaticroute,whereasanythingabove
49%isallowedthroughthegovernmentapproval.

SECTORPOLICY
NationalPolicyOnElectronics(NPE):

1.NPEsvisionistocreateagloballycompetitiveElectronicsSystemDesignandManufacturing(ESDM)industry
tomeetthecountrysneedsandservetheinternationalmarket.
2.DevelopanecosystemforagloballycompetitiveESDMsectorinthecountrybyattractinginvestmentinexcess
ofUSD100Billionandgeneratingemploymentfor28Millionpeopleatvariouslevels.
3.Todevelopcorecompetenciesinstrategicandcoreinfrastructuresectorsliketelecommunications,automobile,
avionics,industrial,medical,solar,informationandbroadcasting,railways,intelligenttransportsystems,etc.
4.Anumberofstategovernmentshavealsocomeupwithseparatestatespecificpoliciesforelectronicssector.

PreferentialMarketAccess:

1.PreferencetodomesticallymanufacturedelectronicproductsinGovernmentprocurement.
2.Nine(9)electronicproductsandtwentythree(23)telecomproductsarenotifiedunderthepolicy.
3.AllcompaniesregisteredinIndiaengagedinmanufacturingofelectronicproductsinIndiaandthesoleselling
agents/authoriseddistributors/authoriseddealers/authorisedsupplyhousesofthedomesticmanufacturersof
electronicproductsareeligibleforconsiderationunderthePolicy.
4.Theelectronicproductstobenotifiedunderthispolicyshallmeettheminimum25%domesticvalueadditionin
termsofBillofMaterial(BoM)fromdomesticmanufacturers.

InformationTechnologyInvestmentRegions(ITIR):

1.Karnataka(42.5sq.km,nearBengaluru,aUSD17.6Billioninvestment).
2.Telangana(202sq.km,nearHyderabad,USD36.4Billioninvestment).
3.SemiconductorWaferFabrication(FAB)manufacturingfacilitiesbeingsetupinIndiainUttarPradeshand
GujaratwithatotalinvestmentofUSD10.5Billion.

ElectronicSectorSkillsCouncilandTelecomSectorSkillsCouncilhavebeensetupforestablishinganeffectiveand
efficientecosystemfordevelopingandimpartingoutcomeorientedskillsfortheESDMsector.Atotalof0.09million
peoplearetobesupportedundertheSkillDevelopmentSchemeinsixdifferentstates.

FINANCIALSUPPORT
PROVISIONSOFTHE20162017UNIONBUDGET:

1. Extensionofdifferentialexcisedutydispensationmadeavailabletomobilehandsets/tablet
computerstospecifiedelectronicequipment: Thedifferentialexcisedutydispensationmadeavailableto
mobilehandsets/tabletcomputershasbeenextendedtothefollowingelectronicequipment.However,thesewillbe
chargedexcisedutyof4%(withoutinputtaxcredit)whileCountervailingDuty(CVD)onimportsshallbe12.5%.
Routers
Broadbandmodems
Settopboxesforgainingaccesstointernet
SettopboxesforTV
DigitalVideoRecorder(DVR)/NetworkVideoRecorder(NVR)
CCTVCamera/IPCamera
Lithiumionbatteries(otherthanthoseformobilehandsetsincludingcellularphones)

2. MobileHandsets: Topromotedomesticvalueadditioninmobilehandsets,CountervailingDuty/Exciseduty
exemptionhasbeenwithdrawnonchargeroradapter,battery,andwiredheadsetsformanufactureofmobile
handsetswhileexcisedutystructureontheseitemsforsupplytomobilehandsetmanufacturershasbeenchanged.
Thesewillbechargedexcisedutyof2%(withoutinputtaxcredit)whileCVDonimportsshallbe12.5%.Toenable
this,inputs,partsandsubpartsforthemanufactureofthesegoodshavealsobeenexemptedfromBCD(Basics
CustomsDuty),CVD/ExcisedutyandSpecialAdditionalDuty(SAD).
3. Semiconductorwaferfabrication/LCDfabricationandATMPunits: BCDandSADhavebeen
exemptedonmachinery,electricalequipment,otherinstrumentsandtheirparts(exceptpopulatedPrintedCircuit
Boards)foruseinsemiconductorwaferfabrication/LCDfabricationandAssembly,Test,MarkingandPackagingof
semiconductorchips(ATMP)units.
4. Capacitorgradepolypropylenegranules: BCDoncapacitorgradepolypropylenegranulesorresinsforthe
manufactureofcapacitorgradeplasticfilmhasbeenexempted.
5. Magnetronformicrowaveovens: BCDhasbeenexemptedonmagnetronofupto1.5KWusedforthe
manufactureofdomesticmicrowaveovens.
6. Subminiaturefuses,microfuses,resettablefusesandthermalfuses: BCDhasbeenexemptedon
specifiedrawmaterialsandcapitalgoodsforuseinmanufactureofsubminiaturefuses,microfuses,resettable
fusesandthermalfuses.
7. BrushlessDirectCurrent(BLDC)electricmotors: BCDonNeodymiumMagnet(beforeMagnetization)
andMagnetResin(StrontiumFerritecompound/beforeformed,beforemagnetization)foruseinmanufactureof
BrushlessDirectCurrent(BLDC)motorshasbeenreducedfrom7.5%/10%to2.5%.
8. SimplificationofCustoms(ImportofGoodsatConcessionalRateofDutyforManufactureof
ExcisableGoods)Rules: TheexistingCustoms(ImportofGoodsatConcessionalRateofDutyforManufacture
ofExcisableGoods)Rules,1996hasbeensubstitutedwiththeCustoms(ImportofGoodsatConcessionalRateof
DutyforManufactureofExcisableGoods)Rules,2016withaviewtosimplifytherules,includingallowingduty
exemptionstoimporter/manufacturerbasedonselfdeclarationinsteadofobtainingpermissionsfromtheCentral
Exciseauthorities.Needforadditionalregistrationhasalsobeendoneawaywith.

ModifiedSIPS:
Capitalsubsidyupto2025%for10yearsoncapitalexpenditure.
ReimbursementofCVD/exciseforcapitalequipmentinnonSEZunits.
Availablefortheentirevaluechainofelectronicsproductsunder44verticals.
Incentivesavailablefor10yearsfromthedateofreceiptofInitialapplication.

ElectronicsDevelopmentFund
AFundoffundstoinvestinprofessionallymanagedventurefundswithaninvestmentfocusonElectronics,
NanoelectronicsandIT.
EDFtotakeminoritystakeintheventurefunds.
AvailableforapprovalofnewDaughterFundsupto31.03.2017

Electronicmanufacturingclusters(EMC):
Providesupportforcreationofworldclassinfrastructure
TheassistancefortheprojectsinGreenfieldElectronicsManufacturingClustersisrestrictedto50%oftheproject
costsubjecttoaceilingofUSD7.69millionforevery100acresofland.
ForBrownfieldEMC75%ofthecostofinfrastructure,subjectedtoaceilingofUSD7.69millionisprovidedas
Grant.
Schemeisopenforreceivingapplicationsforaperiodoffiveyearsfromthedateofnotification.
44applicationsfrom18statesinvolvingmorethan7000acresoflandatvariousstages.

ExportIncentives:
Exportincentives23%areavailableundertheMerchandiseExportfromIndiaScheme(MEIS).

AreasbasedIncentives:
IncentivesforunitsinSEZ/NIMZasspecifiedinrespectiveactsorthesettingupofprojectsinspecialareassuch
astheNortheast,Jammu&Kashmir,HimachalPradesh&Uttarakhand.
ForcomplianceofelectronicgoodswithIndianStandards,bothtestingandcertificationarerequiredforexports.

StateIncentives:
Apartfromtheaboveincentives,Indiaoffersadditionalincentivesforindustrialprojects,whilesomestatesoffer
separatepoliciesforthissector.

SupportforInternationalPatentProtectioninE&ITIISIPEITII
ToprovidesupporttoMSMEsandStartupstryingtosecureintellectualpropertyrightsonagloballeveland
establishcompetitiveadvantage
ReimbursementislimitedtoatotalofUSD23076.92perinventionor50%ofthetotalexpensesincurredinfiling
andprocessingofpatentapplicationuptograntwhicheverislesser.

ConcessionalDuty

ThefollowingdutyexemptionsareavailableforpromotionofmanufacturingofsolarPVcells/modules.

1.CustomsDutyExemptionforimportofrawmaterialforuseinmanufactureofEVASheetorbacksheetwhich
areusedinmanufactureofSolarPhotoVoltaicCellsormodules.
2.CustomsDutyExemptionforimportofflatcopperwireforuseinmanufactureofPhotovoltaicribbon(tinned
copperinterconnect)forthemanufactureofsolarphotovoltaiccellsormodules.
3.CentralExciseDutyExemptionforpurchaseofrawmaterialforuseinmanufactureofEVAsheetorbacksheet
whichareusedinmanufactureofsolarphotovoltaiccellsormodules.
4.CentralExciseDutyExemptionforpurchaseofflatcopperwire/roundcopperandtinalloywireforusein
manufactureofphotovoltaicribbon(tinnedcopperinterconnect)forthemanufactureofsolarphotovoltaiccellsor
modules.
5.CentralExciseDutyExemptionforsellingEVAsheetsorbacksheetsforuseinthemanufactureofsolarphoto
voltaiccellsormodules.

INVESTMENTOPPORTUNITIES
SettingupofElectronicsManufacturingClusters(EMCs).
SemiconductorWaferFabrication(FAB).
ElectronicComponents.
Strategicelectronics
SemiconductorDesign.
ElectronicsManufacturingServices(EMS).
Telecomproducts.
Industrial/Consumerelectronics.

FOREIGNINVESTORS
Qualcomm(USA)
Samsung(SouthKorea)
LG(SouthKorea)
GE(USA)
Jabil(USA)
Flextronics(USA)
Bosch(Germany)
Amphenol(USA)
MothersonSumisystem(Japan)
Nidec(Japan)
MagnetiMarelli(Italy)
Continental(Germany)
HMCMM(Japan)
Delphi(USA)
MandoHella(SouthKorea)
Mitsubishi(Japan)
Harman(USA)
Perto(Brazil)
GieseckeandDeverient(Germany)
Haier(China)
Philips(Netherland)
LiebherrHausgerate(Germany)
M2i(Taiwan)
Asti(Japan)
Panasonic(Japan)
Huawei(China)

AGENCIES
TheMinistryofElectronics&InformationTechnology

IndustryPartners:
ManufacturersAssociationforInformationTechnology
ElectronicIndustriesAssociationofIndia
ConsumerElectronicsandAppliancesManufacturersAssociation
IndiaElectronicsSemiconductorAssociation
IndianElectrical&ElectronicsManufacturersAssociation
AutomotiveComponentManufacturersAssociationofIndia
AssociationofIndianMedicalDeviceIndustry
ACHIEVEMENTREPORT
ClickheretoviewTelecommunicationsSector:AchievementReport
ClickheretoviewElectronics&ITSector:AchievementReport

MAKEININDIA
ns3.kpmg.com

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