National Policy on Electronics 2012

‘National Policy on Electronics’ (NPE) cleared by the Government

The Union Cabinet cleared the National Policy on Electronics 2012.

Objective: By 2020, make the Indian domestic electronic hardware manufacturing segment into a $ 400 billion industry.

  • Government will create an ecosystem for a globally competitive ESDM (Electronic System and Design and Manufacturing) sector in India
  • To achieve a turnover of about $400 billion by 2020.
  • Investment of about $100 billion
  • The government will facilitate the provision of fiscal incentives for investment, setting up of electronic manufacturing clusters, preferential market access to domestically manufactured electronic products, setting up of semiconductor wafer fabrication facilities, industry friendly and stable tax regime.
  • Employment generation (around 28 million new jobs at various levels).
  • A high level Empowered committee has been constituted to identify and shortlist technology and investors for setting up 2 semiconductor wafer manufacturing fabrication facilities (electronic chip making plants).
  • Govt had earlier already approved a policy for providing preference to domestically manufactured electronic goods.

The two schemes already approved by the Government which are linked to National Electronics Policy 2012 are:-

  1. Modified Special Incentive Package scheme.
  2. Electronics Manufacturing Clusters (EMCs) scheme. 

What if the Government doesn’t takes the initiative at this stage?

  • If the government doesn’t takes this initiative, then it is estimated that at the current rate of growth, domestic production can ply to a demand of $100 billion by 2020 as against the now target demand of $400 billion.
  • The rest of the demand would have to be met by imports.
  • Thus, there would be an a demand-supply gap of almost $300 billion (=$400bn – $100bn)  by 2020.
  • It is also feared that if situation is rectified, by 2020, the Indian electronics’ import may exceed Indian oil imports.
  • Due to the Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with several countries, the import of electronics hardware in India from these countries is allowed either at zero duty or at a duty which is lower than the normal duty rate. Thus, it puts Indian domestic manufacturers at a disadvantageous position.

* Indian domestic production in 2008—09 was worth about $20 billion.

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