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India is set to advance into the second phase of its electronics manufacturing journey, known as Electronics Manufacturing Services (EMS) 2.0, which will focus on the actual manufacturing of electronic components, according to a report by Phillip Capital.
In contrast, the first phase, EMS 1.0, was primarily centered on assembling electronic components. The report highlighted that the government is working on introducing a new Production Linked Incentive (PLI) scheme for electronic components. This scheme aims to achieve value addition of 35-40 per cent, doubling the current levels of 18-20 per cent achieved under the ongoing electronics manufacturing incentive programs. The report said, "In the first phase of India's electronics manufacturing push, or EMS 1.0, is mainly for assembling electronic components, while the second phase, or EMS 2.0, will mainly deal with the actual manufacturing of electronic components." Once implemented, the new PLI scheme is expected to drive long-term value addition, making India a more competitive destination for electronics manufacturing. This shift will emphasize locally sourced components, reducing dependence on costly imports, which are often impacted by tariffs and other challenges. The report further pointed out that while India has made significant progress in electronics assembly, particularly in the mobile and consumer electronics segments, it continues to rely heavily on imports for component manufacturing and design. So EMS 2.0 to focus on that segment. Despite excelling in final assembly and sub-assembly processes, the country's limited capabilities in component production remain a challenge. To address this gap, the government had previously introduced the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), offering a 25 per cent upfront capex incentive to boost investment in electronic components. However, both the PLI for Large-Scale Electronics Manufacturing (set to conclude in FY26) and the SPECS scheme are nearing their deadlines. With these initiatives concluding soon, the time is ripe for a new subsidy scheme dedicated to electronic components. Such a scheme is seen as a crucial step to transition from EMS 1.0, focused on assembly, to EMS 2.0, which emphasizes component manufacturing. This progression aligns with India's vision of becoming a global hub for electronics manufacturing. (ANI)
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