NATIONAL POLICY ON ELECTRONICS 2019

The National Policy on Electronics 2019 (NPE 2019) is an ambitious policy framework launched by the Ministry of Electronics and Information Technology (MeitY), Government of India. The policy aims to position India as a global leader in electronics manufacturing, promote innovation, and create a conducive environment for the growth of the electronics ecosystem.

NPE 2019 was introduced as an updated version of the National Policy on Electronics 2012, recognizing the need for a more dynamic and comprehensive approach to capitalize on the opportunities emerging from the fast-growing global electronics market. The focus is to enhance India’s manufacturing capabilities, reduce imports, increase domestic production, and boost exports of electronics goods.

Key Objectives of National Policy on Electronics 2019:

1. Making India a Global Electronics Hub: The primary objective is to promote domestic manufacturing in the electronics system design and manufacturing (ESDM) sector and position India as a key player in the global value chain.
2. Achieve $400 Billion Electronics Manufacturing by 2025: The policy sets a target to achieve $400 billion in electronics manufacturing by 2025, which includes manufacturing of 1 billion mobile handsets and exporting 600 million units.
3. Promote Innovation and R&D: NPE 2019 aims to create an environment that fosters innovation, research and development (R&D), and entrepreneurship in the electronics sector. This includes setting up R&D centers, innovation hubs, and promoting startups in the field of electronics design.
4. Increase Exports: The policy promotes boosting electronics exports by developing world-class infrastructure and providing incentives for export-oriented units. This would help India to become a major exporter of electronics products, especially to regions like Africa, the Middle East, and Latin America.
5. Create Employment: The policy envisions creating approximately 10 million jobs in the electronics sector by 2025, through the promotion of large-scale manufacturing, startups, and allied services like logistics and maintenance.
6. Substitute Imports with Domestic Production: A key goal is to reduce dependency on imported electronics goods, particularly in strategic sectors like semiconductors, components, and consumer electronics, by boosting domestic production.
7. Support Emerging Technologies: The policy emphasizes the need to focus on emerging technologies such as artificial intelligence (AI), 5G, Internet of Things (IoT), blockchain, machine learning, and robotics to ensure that India remains competitive in global electronics innovation.

Key Features of NPE 2019:

1. Incentive Programs: The policy introduces multiple financial incentive schemes to attract investment, such as:
   • Production Linked Incentive (PLI) Scheme: Offers incentives based on incremental sales of electronics products manufactured in India.
   • Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme: Provides financial support for setting up world-class electronics manufacturing clusters (EMCs) with the required infrastructure.
   • Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS): Offers capital incentives to companies involved in manufacturing semiconductors and other essential electronic components.
2. Promoting Domestic Manufacturing of Critical Components: NPE 2019 focuses on strengthening the domestic ecosystem for manufacturing key electronic components such as semiconductors, displays, chipsets, printed circuit boards (PCBs), and passive components, which are currently imported in large quantities.
3. Development of Electronics Manufacturing Clusters (EMCs): The policy promotes the development of Electronics Manufacturing Clusters across India, providing state-of-the-art infrastructure, including plug-and-play facilities, logistics support, and testing facilities. These clusters attract both domestic and foreign companies, helping in the creation of economies of scale.
4. Skilling and Training Programs: Recognizing the need for a skilled workforce in electronics manufacturing, NPE 2019 encourages skill development programs aimed at providing training in areas like electronics design, assembly, maintenance, and repair. Collaborations with educational institutions, vocational centers, and industry associations are encouraged to bridge the skills gap.
5. Boost to Electronics Startups and Innovation: To promote innovation in electronics, NPE 2019 emphasizes the creation of startup incubation centers and innovation hubs across India. The government aims to support research and development (R&D) in areas like microelectronics, chip design, and next-generation technologies. This includes offering financial grants to startups and entrepreneurs engaged in electronics design and innovation.
6. Promoting Indigenous Capabilities in Defense and Strategic Electronics: The policy encourages domestic companies to produce electronics goods for defense and strategic purposes, such as communication systems, radars, sensors, and satellite components. This is crucial for ensuring self-reliance in defense electronics.

Achievements of National Policy on Electronics 2019:

1. Mobile Phone Manufacturing Boom:
   • India has seen a massive growth in mobile phone manufacturing due to favorable policies under NPE 2019. India became the second-largest mobile phone manufacturer in the world, behind China, with companies like Samsung, Apple (via Foxconn and Wistron), Xiaomi, and Oppo establishing manufacturing units in India.
   • The Production Linked Incentive (PLI) Scheme for large-scale electronics manufacturing played a crucial role in attracting these companies to scale up their production in India.
2. Component Manufacturing Ecosystem:
   • The Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) has helped companies set up manufacturing units for essential components like semiconductors, displays, sensors, and microprocessors. This is a step toward reducing dependency on imports for critical components.
3. Emergence of Electronics Manufacturing Clusters (EMCs):
   • Several Electronics Manufacturing Clusters (EMCs) have been developed across states like Tamil Nadu, Karnataka, Uttar Pradesh, and Andhra Pradesh. These clusters provide integrated infrastructure and have attracted both domestic and foreign companies to set up manufacturing units.
4. Increased Exports:
   • NPE 2019 has contributed to a rise in electronics exports, particularly mobile phones, consumer electronics, and IT hardware. India has become a key exporter of smartphones, tablets, and LED televisions to countries across Asia, Africa, and the Middle East.
5. Focus on R&D and Innovation:
   • India has made progress in promoting R&D and innovation in electronics design. Several startups and companies have ventured into areas like AI-powered devices, IoT solutions, and semiconductor design. The government’s support for innovation hubs and funding schemes has helped create an environment for electronics design startups to thrive.

Example: The Growth of Mobile Phone Manufacturing in India

One of the most successful examples of the impact of NPE 2019 is the mobile phone manufacturing sector.

Pre-NPE 2019 Scenario:

• Before 2014, India was heavily dependent on imports for mobile phones, and very little domestic manufacturing took place. Almost all mobile phones used in India were imported, particularly from China and South Korea.

Post-NPE 2019 Impact:

• Due to the policy’s incentives, global giants like Samsung, Xiaomi, Apple (via Foxconn and Wistron), Oppo, Vivo, and OnePlus set up manufacturing units in India.
• India became the second-largest mobile phone manufacturer in the world by 2020, with more than 90% of mobile phones sold in India being manufactured domestically.
• Samsung established the world’s largest mobile phone manufacturing facility in Noida, Uttar Pradesh, showcasing the success of NPE 2019’s incentives.
• Foxconn, the contract manufacturer for Apple, ramped up its production of iPhones in India, leading to both domestic sales and exports.
• The Production Linked Incentive (PLI) Scheme provided financial incentives based on incremental sales, encouraging companies to meet production targets, thus boosting domestic manufacturing.

Results:

• Mobile phone exports from India grew significantly, with Made in India phones being exported to countries in Europe, Africa, and Asia.
• The growth of mobile phone manufacturing created thousands of jobs and boosted ancillary industries such as component manufacturing, logistics, and packaging.

Challenges Facing NPE 2019:

1. Dependence on Imports for Semiconductors: Despite the growth in electronics manufacturing, India continues to rely heavily on imports for semiconductors and advanced microelectronics. The global semiconductor shortage during the COVID-19 pandemic highlighted the need for domestic capacity in this area.
2. Skilled Workforce Shortage: The sector faces a shortage of highly skilled workers, especially in advanced manufacturing and electronics design. Despite efforts through Skill India and other programs, the gap between industry needs and the skills available in the workforce remains a challenge.
3. Global Competition: India faces intense competition from established manufacturing hubs like China, South Korea, and Vietnam. These countries offer more mature supply chains, advanced infrastructure, and lower costs, making it difficult for India to compete in some areas.
4. Supply Chain Bottlenecks: India’s electronics manufacturing supply chain is still developing, and there are gaps in the availability of critical raw materials, components, and technologies, which affect the competitiveness of Indian manufacturers.

Conclusion:

The National Policy on Electronics 2019 has made significant progress in promoting domestic electronics manufacturing, increasing exports, and attracting foreign investment. The growth of the mobile phone manufacturing industry is a clear example of how effective policies can transform a sector. However, challenges related to semiconductors, supply chains, and skills development must be addressed to fully achieve the policy’s ambitious goals by 2025.