Production Linked Incentive Scheme (PLI)/ Electronics Production Subsidy for Large Scale Electronics Manufacturing
Actual growth potential of Electronics is curtailed by specific constraints such as large capital investments and rapid changes in technology. The Government has been actively working towards attracting large investments into the manufacturing sector. With an aim to promote this, the Ministry of Electronics and Information Technology has introduced Electronics Production Subsidy
The domestic production of electronics hardware is INR 4,58,006 Crore (USD 70 billion) in 2018-19. With the domestic demand for electronics hardware expected to rise rapidly to approximately INR 26, 00,000 crore (USD 400 billion) by 2025, India is visionary about positioning itself as a global hub for Electronics System Design and Manufacturing (ESDM) by encouraging and driving capabilities in the country.
The Production Linked Incentive Scheme (PLI)/ Electronics Production Subsidy introduced by government for Large Scale Electronics Manufacturing proposes a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain including electronic components and semiconductor packaging.
Quantum of Incentive: The Scheme shall extend an incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India and covered under target segments, to eligible companies, for a period of five (5) years subsequent to the Financial Year 2019-20 being treated as the base year for computation of incremental investment and incremental sales of manufactured goods (as distinct from traded goods).
Eligibility: Support under the Electronics Production Subsidy Scheme shall be provided only to companies engaged in manufacturing of target segments in India. This shall include contract manufacturers as defined in the FDI Policy Circular of 2017.
1. Each application shall be limited to one (1) of the target segments.
2. Eligibility shall be subject to thresholds of incremental investment and incremental sales of manufactured goods (as distinct from traded goods). An applicant must meet all the threshold conditions to be eligible for disbursement of incentive. Eligibility threshold criteria are detailed in Annexure A.
3. Eligibility under Production Linked Incentive scheme shall not affect eligibility under any other Scheme and vice-versa.
Target Segments: The Scheme shall only be applicable for target segments namely mobile phones and specified electronic components (as detailed in Annexure B).
Tenure of the Scheme: Support under the Scheme shall be provided for a period of five (5) years subsequent to the Financial Year 2019-20 being treated as the base year;
1. The Scheme shall be open for applications for a period of 4 months initially which may be extended.
2. The Scheme may also be reopened for applications anytime during its tenure based on response from the industry.
3. For applications received post the initial application period, applicants shall only be eligible for incentives for the remainder of the Scheme’s tenure.
Basis of Computation
1. Assessment of incremental investment and sales of manufactured goods shall be based on details furnished to the Departments / Ministries / Agencies and Statutory Auditor certificates.
2. Functional Guidelines will be issued by MeitY in consultation with concerned Departments / Ministries.
Approval and Disbursement Process
1. Application under the Scheme can be made by any company registered in India.
2. An initial application, complete in all aspects, will have to be submitted before the due date. Acknowledgement will be issued after initial scrutiny of the application. The acknowledgement shall not be construed as approval under PLI Scheme.
3. Eligible applications will be appraised on an ongoing basis and considered for approval.
4. Incentive shall be released to eligible applicants, meeting the required thresholds and whose disbursement claims are found to be in order.
5. Incentives under the Scheme will be applicable from 01.08.2020.
Notification No. W-28/1/2019-IPHW-MeitY.
More Information will be available from the Scheme Guidelines as framed by Ministry of Electronics & Information Technology on timely basis.
Government has also introduced Capital Subsidy Scheme in order to promote Electronics manufacturing, which can be read at: Electronics- Capital Subsidy
To read about reduced rate of tax for newly established domestic manufactring companies: Visit Section 115BAB
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