UPSC CURRENT AFFAIRS – 09th April 2025
Union Cabinet approves ₹22,919 Cr scheme for promoting electronics component manufacturing
Why in News?
Recently, the Union Cabinet approved the ₹22,919 crore Electronics Component Manufacturing Scheme to boost domestic production of electronic components and reduce import dependence.
Introduction
- The Government of India, in its big leap towards self-reliance in the electronics industry, sanctioned the Electronics Component Manufacturing Scheme (ECMS) on 28 March 2025 with a budget outlay of ₹22,919 crore to be spent over six years.
- The scheme is an important strategic transition from finished electronics products to building a strong component manufacturing ecosystem within the nation.
Need for the Scheme
- India has witnessed tremendous growth in manufacturing electronics over the last few years, especially in the assembly of mobile handsets and the packaging of semiconductors.
- Yet, most of the components going into these finished products — including semiconductors, printed circuit boards, and lithium-ion batteries — are still imported.
- This has kept India’s domestic value addition at about 20%, while the developed world has reached 38–40% value addition after many decades of concerted effort.
In order to fill this gap and minimize import reliance, there is an imperative to stimulate the domestic production of active and passive electronic components along with capital goods employed in their manufacture.
Major Features of the Scheme
Financial Outlay and Tenure:
- Total outlay: ₹22,919 crore.
- Scheme period: 6 years.
Incentive Pattern:
- As opposed to previous schemes such as the Production Linked Incentive (PLI) scheme, ECMS provides no incentives based on incremental production.
- Instead, incentives will be tied to factory turnover and employment creation, making it more performance-oriented and inclusive.
Targets:
- Induce investments of ₹59,350 crore.
- Attain production output of ₹4,56,500 crore.
- Generate approximately 91,600 direct jobs in the manufacturing of electronics components.
Component Coverage:
The scheme covers:
- Active components: Semiconductors and critical electronic components.
- Passive components: Resistors, capacitors, inductors, etc.
- Bare components: Printed circuit boards (PCBs), enclosures, lithium-ion batteries.
- Sub-assemblies: Controllers for display panels, camera modules, etc.
Support for Capital Goods
- One of the focus areas of the scheme is manufacturing of capital goods, i.e., machinery employed in producing components.
- A number of clusters for such manufacturing already exist in cities such as Coimbatore, Bengaluru, Pune, Rajkot, and Vadodara.
Importance of the Scheme:
- Boost to Value Addition: Seeks to double India’s domestic value addition in electronics from 20% to 40%.
- Atmanirbhar Bharat: Contributes to the objective of curbing import dependence and developing indigenous capabilities.
- Employment Generation: Will generate a substantial amount of direct and indirect employment in high-skill and semi-skill industry.
- Technology and Innovation: Promotes innovation in component design and domestic manufacturing procedures.
- Supply Chain Resilience: Minimizes vulnerability to global disruptions by localizing key parts of the electronics supply chain.
Challenges Ahead
- Skilled Workforce: India will have to upskill a large workforce to match industry requirements.
- Technology Transfer: Technological partnerships and R&D investments will be needed to implement import substitution.
- Infrastructure: Power supply, logistics, and testing facilities need to be scaled up to enable manufacturing clusters.
Coordination: Strong coordination among Central and State governments, and between public and private sectors, will be essential for effective implementation.
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