SPECS by the Government of India

29 June 2020: The Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS) was notified by the Ministry of Electronics and Information Technology (MeitY), Government of India on 1st April 2020 with a view of strengthening the electronics hardware manufacturing in India along with “Make in India” and “Digital India” programs. SPECS aims to create an electronics manufacturing ecosystem in India that would help value addition in the total electronics supply chain. This scheme was introduced as the next step to the National Policy on Electronics 2019 (NPE2019) which envisaged to position India as a global hub for Electronics System Design and Manufacturing (ESDM). It recognizes that the vision of NPE2019 can be achieved through driving capabilities in the country for developing core components, including chipsets, and creating an enabling environment for the industry to compete globally. At the same time, the manufacturing of electronic components and semiconductors is capital intensive and also has to deal with the constantly changing technology, zero basic customs duty on these components in case of imports, as per the Information Technology Agreement of WTO.

To overcome these challenges and encourage further investments in the electronics manufacturing sector, SPECS proposes an incentive of 25% on capital expenditure for the manufacturing of goods that constitute the supply chain of an electronic product. This will apply to investments in new units as well as expansion of capacity/modernization and
diversification of existing units. The capital expenditure will be the total expenditure in the plant, machinery, equipment, associated utilities, and technology, including for Research & Development (R&D). In the case of refurbished plant and machinery, the total value of refurbished plant, machinery, and equipment (including for associated utilities and R&D), whether imported or domestically procured, not exceeding 20% of the total eligible plant, machinery, and equipment (including for associated utilities and R&D), shall be considered for calculation of this incentive. Any other incentives, those offered by the State Governments, or their agencies, would be over and above this.

Any entity registered in India can apply for SPECS till 31st March 2023 and the incentive will be available for the investments made within 5 years from the date of acknowledgment of the
Application.

The incentive will be provided as a reimbursement for the investments made and different thresholds are set for different electronic components under the scheme, as below.

A. List of goods with Minimum Investment Threshold Limit of INR 5 crore

Sl. No. Description of Goods
1 SMT components including LED Chips
2 2 Chip Modules for Smart Cards, RFID Antenna & Labels, CoB/ System in Package
3 3 Passive components including resistors, capacitors, ferrites, etc. for electronic applications
4 Electromechanical components including transformers, inductors, coils, relays, switches, micromotors, stepper motors, BLDC Motors, Connectors, Heat Sinks, Antenna, Speakers, Microphones, etc. for electronic applications
5 Magnetrons, Waveguides, Circulators, Couplers, Isolators, Filters, Magnets, RF Components for electronic applications
6 6 Printed Circuit Boards (PCBs), PCB Laminates, Prepegs, Photopolymer films, PCB Printing Inks; Printed Flexible Electronics
7 Sensors, Transducers, Actuators, and Crystals for electronic applications
8 8 Camera Modules, Vibrator motor/ ringer
9 USB/Data Cables, HDMI Cables
10 Capital goods for all the goods covered under SPECS

B. List of goods with a Minimum Investment Threshold limit of INR 15 crore

Sl. No. Description of Goods
1 Active Components: a. Discrete semiconductor devices including transistors, diodes, etc. b. Power semiconductors including FETs, MOSFETs, Thyristors, etc.
2 Preform of Silica and Optical Fibre
3 Display Assembly and Touch Panel/ Cover Glass Assembly

C. List of goods with Minimum Investment Threshold Limit of INR 25 crore

Sl. No. Description of Goods
1 Micro/Nano-electronic components such as Micro Electro Mechanical Systems (MEMS) and Nano Electro-Mechanical Systems (NEMS)
2 Assembly, Testing, Marking and Packaging (ATMP) units

D. List of goods with Minimum Investment Threshold Limit of INR 75 crore

Sl. No. Description of Goods
1 Mechanics (plastic and metal parts) for electronic applications

E. List of goods with Minimum Investment Threshold Limit of INR 250 crore

Sl. No. Description of Goods
1 Compound Semiconductors such as GaN, SiC, GaAs, etc. and Silicon Photonics devices/ Integrated Circuits, Optoelectronic components

F. List of goods with Minimum Investment Threshold Limit of INR 500 crore

Sl. No. Description of Goods
1 Semiconductor Wafers

G. List of goods with Minimum Investment Threshold Limit of INR 1,000 crore

Sl. No. Description of Goods
1 1 Semiconductor Integrated Chips (ICs) including Logic [Microprocessor, Microcontrollers, Digital Signal Processors (DSP), Application-Specific Integrated Circuits (ASICs), etc.]; Memory; Analog/Mixed-Signal ICs, etc.
2 2 Display fabrication units including Liquid Crystal Displays (LCD), Light Emitting Diode (LED), Organic Light Emitting Diode (OLED), etc. for electronic applications

SPECS will be implemented through several nodal agencies called Project Management Agencies. The total amount of incentives offered under the scheme is INR 3,285 crores over 8 years.

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