Govt plans scheme for companies making display units in India

After announcing incentive schemes for mobile and IT hardware manufacturing, the government is now planning to chart out a similar plan for setting up display fabrication units in the country. The ministry of electronics and IT (MeitY) has invited expressions of interest (EoIs) from companies which want to set up LCD/OLED/AMOLED/QLED based display fabrication units in India.

The information received in response to this EoI will be utilised to formulate a scheme for setting up display fabrication units (FABs) in the country. Companies have been given time till April 30 to apply.

As per information shared by the government, displays constitute a significant portion of the total bill of materials (BoM) in electronic products. For instance, displays account for over 25% of the BoM in case of smartphones and over 50% in case of LCD/LED TVs. India’s display panel market is estimated to be $7 billion and expected to grow to $15 billion by 2025. Current requirements are met exclusively through imports.

The outlay for the scheme will be decided once all the companies submit their applications and suggest what kind of incentives are required. The government plans to develop an ecosystem of various components of electronics in the country. That is the reason why a localisation schedule has been incorporated in the recently launched production linked scheme (PLI) scheme for IT hardware manufacturing.

As per estimates from industry body ELCINA, the electronics components manufacturing sector suffers from a disability of around 10% due to lack of adequate infrastructure, domestic supply chain and logistics, high cost of finance, inadequate availability of quality power, limited design capabilities and focus on R&D by the industry. “Given this and the capital-intensive nature of display manufacturing, there is a need to incentivise the industry setting up display FAB facilities in India,” the EoI said, a copy of which has been seen by FE.

The global electronics industry is currently valued at $2 trillion and is expected to grow significantly given the increasing penetration of emerging technologies. India’s share in global electronics manufacturing has grown from 1.3% in 2012 to 3.6% in 2019. Domestic electronics manufacturing has increased substantially from Rs 1,90,366 crore in 2014-15 to Rs 5,33,550 crore in 2019-20 at a CAGR of 23%.

While submitting applications, the companies need to provide details about proposed locations to set up the FAB and land, water and power requirements. Details about technical specifications, operational things like capacity as well as financial details like source of funding, ownership structure etc need to be provided. The firms should list out support desired from government including grant-in-aid, viability gap funding, tax incentives, infrastructure support, requirement of regulatory waivers etc.

India is aspiring for a more than five-fold increase in electronics manufacturing to $400 billion by FY25 by focusing on export markets and incentivising manufacturers to become globally competitive.

Last April, the government rolled out a Rs 41,000-crore PLI scheme for large-scale electronics manufacturing. The scheme extended incentives of 4% to 6% on incremental sales over the base year for goods manufactured in India for a period of five years subsequent to the base year as defined. Earlier, this month, another scheme for IT hardware with an outlay of Rs 7,350 crore has been launched. The government will offer incentives in the range of 4% to 1% over a period of four years for manufacturing laptops, tablets, all-in-one PCs and servers in India.