Analysis based on	Editorial published on In IT policy pipeline: Rs 23k-crore electronic subsidy scheme for value-add and jobs in The Indian Express on March 6th, 2025
Topics for UPSC Prelims	Production Linked Incentive (PLI) Scheme
Topics for UPSC Mains	Government Policies for Employment Creation, Foreign Direct Investment (FDI)

The government of India has introduced a new scheme to help produce more electronics in the country. The name of the scheme is the Rs 23,000 crore electronic subsidy scheme. The purpose of the scheme is to make India a leader in electronics production through the generation of more employment opportunities and reducing the use of importing electronics components from other places. Previous to this, India would manufacture smartphones but not a lot of the components that are placed inside them. Now, with this new plan, the government wants to turn it around and manufacture more meaningful electronic components in India.

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What is the Rs 23,000 Crore Electronic Subsidy Scheme?

The electronic subsidy scheme is a concept in which the Indian government will provide funds to companies that manufacture essential parts of electronics like display modules, camera parts, batteries, and circuit boards. The scheme is important because India imports these parts from other countries at a high cost. The idea is to manufacture these parts within India so that the country will not need to import them from other countries anymore.

The government is giving Rs 23,000 crore (a huge amount of money) over the next six years. This will help companies set up or modernize their factories to make these components. Through this, the government wishes to create more employment for Indians and allow India to grow its electronics industry.

The key aims of the Rs 23,000 Crore Electronic Subsidy scheme are:

• Currently, India produces only a small percentage of the components required for electronics. The government wishes to raise this so that a minimum of 30-40% of electronics components used in India are produced in India.
• The scheme will provide 91,600 direct employment opportunities in the next six years. This will enable people to get jobs and boost the economy.
• The scheme will also invite foreign firms to invest in India. The foreign firms can either shift their technology to Indian firms or collaborate with Indian firms to establish factories.
• India currently imports much of its electronics components from other nations. The scheme is aimed at cutting down on this by promoting local manufacturing.

Read the article on the PM E-DRIVE Scheme!

Key Features of the Rs 23,000 Crore Electronic Subsidy Scheme

The main features regarding scheme are as follows:

• Three types of incentives will be given to the firms.
  • Operational Incentive: Such incentives are based on how much product the company sells.
  • Capital Expenditure Incentives: Such incentives are given by measuring the firm's investment in building or developing its factories.
  • Combination of Both: Certain companies may receive a combination of both rewards.

• Companies can get subsidies if they set up new factories (greenfield) or improve their existing factories (brownfield).
• Foreign companies can join the scheme by transferring technology or forming partnerships with Indian companies.

Significance of the Rs 23,000 Crore Electronic Subsidy Scheme

This scheme is highly significant as it will make India more self-dependent in electronics production. The following are some important reasons why:

• Massive amounts of electronic components are needed in India to produce electronics products like computers and phones. India currently imports 75% of its needs in this context. Therefore, the new policy is likely to assist in producing the components domestically as well as minimize dependence on other nations.
• Thousands of employment opportunities will be generated in high-skilled industries such as the technology and manufacturing sectors. This provides scope for economic development as well as improved prospects in quality industries for most.
• By opening up rewards and incentives, India has established a competitive scenario wherein foreign firms will come onto its shores to establish factories as well as share its technology. This would allow India to gain highly advanced manufacturing methods.
• This makes more electronics component manufacturing in the country to provide employment opportunities and enhances the revenue generation of the country by exporting such goods.

Read the article on the Prime Minister's Employment Generation Programme!

Current State of India’s Electronics Manufacturing Industry

India has managed to get big firms such as Apple and Samsung to produce smartphones in the country over the last few years. The components used in these phones are largely imported, though. India's electronics production currently stands at just 10% of the overall production in the country. The majority of the components, such as semiconductors, batteries, and integrated circuits, are still purchased from abroad.

Then, after oil, the second-highest import of electronics is by India, and vast sums are used in importing the parts. The government has come to understand that the demand for the spares will grow over time, hence the reason the new scheme is of significance.

Read the article on the List of Latest Government Schemes of India!

Some of the challenges that face India's electronics manufacturing industry include:

• India's manufacturing industry is much behind compared to other nations. It needs development with optimum efficiency.
• It is a heavy investment to manufacture electronic components. However, every rupee of component investment is just giving returns worth Rs 2-4, whereas with the case of smartphones, Rs 1 investment fetches Rs 20.
• A huge amount of electronic components must be imported, and the nation actually pays for it. Therefore, it is actually essential for India to reduce this need so that it can be independent.

How does the scheme help overcome these challenges?

The scheme was made with the aim of overcoming quite a lot of these challenges:

• The government is optimistic that channeling funds to component makers will develop the companies and subsequently accelerate the sector's development.
• India will acquire new technology for producing electronics components from foreign firms that do share technology. This will improve product quality and render India much more competitive in the global market.
• The scheme also aims at the generation of more than 91,600 jobs, thereby contributing to the development of the Indian economy while preventing unemployment.

Read the article on the FAME India Scheme!

Important Government Initiatives in India’s Electronics Sector

For the purpose of fostering electronics advancement, the government has already launched other schemes. Some of the major initiatives are as follows: 

• Production Linked Incentive (PLI) Scheme: Under the PLI, companies like Apple were helped to establish factories for the assembly of smartphones in India. This new electronic subsidy scheme is another extension of the necessity to enhance India's electronics manufacturing industry as a whole.
• Make in India: Make in India is a campaign created to encourage industries to produce products within the nation for the benefit of creating employment in India and reducing the import burden.
• Atmanirbhar Bharat: Atmanirbhar Bharat is a movement initiated by the government of India for self-sufficiency of India by increasing the production of all sectors including the electronics sector.

The Rs. 23000 crore scheme of electronic subsidy is bold and much needed to drive the country's electronics manufacturing industry. It hopes to lower the import financing of electronic components by enhancing domestic production with a top priority on job creation and making the nation an electronics manufacturing hub. All such efforts will strengthen India's economy and position itself firmly in the international market in the form of becoming self-sufficient.

Hope all your questions about the topic have been answered by reading the editorial. Prepare well for UPSC IAS exams by downloading the Testbook App here!

UPSC Practice Question

1. Discuss the key challenges facing India’s electronics manufacturing sector and the steps the government is taking to address them.
2. What role do foreign companies play in India's electronics manufacturing policies, and how can India leverage technology transfer and joint ventures for industrial growth?