1 week Ago By Dhruv Raghav
The Ministry of Electronics and Information Technology (MeitY) notified an Electronics Component Manufacturing Scheme, with a total budget outlay of Rs. 22,919 crore, on April 8, 2025: a day before Trump’s 26% reciprocal tariffs against India came into effect.According to the Government press release, the new scheme aims to “deepen India’s electronics ecosystem”.
However, the move comes in the wake of the Donald Trump-mandated 26% reciprocal tariffs against India, and as such may apparently be an effort by the Centre to help the country’s electronics manufacturers.While announcing the scheme, Ashwini Vaishnaw, the Minister of Electronics and Information Technology, highlighted that electronics production in India has seen a five-fold growth in the last 10 years. Similarly, he pointed out that the export of electronics from India has witnessed a six-fold growth in the last decade.
Vaishnaw said that India’s smartphone exports have crossed the Rs. 2 lakh crore milestone. Apple’s iPhones alone added Rs.
1.5 lakh crore to the total smartphone exports from the country.Will the US have a problem with this scheme?The Government of India’s new scheme for electronics manufacturers might not sit well with the US.
While announcing the reciprocal tariffs against India and the rest of the world, the US pointed out that India levies a much higher tariff on networking switches and routers (between 10% and 20%) while the US does not levy any tariff on the same.The US has been calling out tariff and non-tariff barriers, which have been hurting its economy. In the White House Executive Order, the US specified that non-tariff barriers include the domestic economic policies and practices of trading partners that suppress domestic consumption and boost exports to the United States.
What are the highlights of the scheme?Under the Electronics Component Manufacturing Scheme, MeitY will provide three types of incentives – turnover-linked incentives, capex incentives and hybrid incentives. Applicants have to fulfill different conditions based on the type of incentives they apply for.Turnover-Linked Incentives: MeitY will award Turnover-Linked Incentives based on incremental sales, with 2024-25 as the base year.
This incentive will be given for six years, and there will be a provision for an optional one-year gestation period. The Turnover-Linked Incentives cover segments such as the Display and Camera module sub-assemblies. The scheme also covers the manufacturing of bare components for electro-mechanical products like – Speakers & microphones for Information Communication Technology (ICT) productsRelaysSwitchesConnectorsHeat sinksAntennasCapex Incentives: The capex incentives will be given on eligible capital expenditure for the manufacturing of target segment products in India.
MeitY will provide 25% incentives for capital goods used in electronics manufacturing, including their subassemblies and components.Hybrid Incentives: The Centre will also provide hybrid incentives. They will be a combination of turnover-linked incentives and capex incentives for manufacturing electronics.
Why this mattersOver the years, the manufacturing of electronic components has gained a significant share in India’s exports to the US. After the US levied high reciprocal tariffs against India and other countries, electronics, like smartphones, will become expensive in the US. According to a report, several electronics manufacturing countries, including India, will be “substantially affected” by the tariffs.
Elementary economics suggests that as the price of a product increases, the demand for the same declines. Hence, India could witness a slump in its electronics exports to the US. And although the new electronics manufacturing scheme for Indian manufacturers could potentially soften the tariffs blow at home, it might irk the White House.
Also read:US Trade Representative Claims NPCI Favours Indian Players Over Foreign Payment FirmsUS Trade Representative Calls India’s Frequent Internet Shutdowns A ‘Trade Barrier’US Govt Opens Investigation Into China’s Semiconductor “Anticompetitive” Trade PracticesThe post MeitY Rolls Out New Electronics Manufacturing Scheme Worth Rs. 22,919 Crore appeared first on MEDIANAMA..
