Electronics Firms Rush to Join New Component Incentive Scheme: What It Offers

About 100 applications have been submitted under the Centre's new financial incentive scheme aimed at boosting electronic component manufacturing and setting up assembly facilities. The ₹22,919 crore Electronics Components Manufacturing Scheme (ECMS) was unveiled just three months ago, in March, by the Ministry of Electronics and Information Technology.

A ministry official, speaking on condition of anonymity to Business Standard, said they have received around 100 applications from Indian and international companies to set up facilities worth ₹7,500–8,000 crore.

The report added that the government is in the process of finalising a project management agency for the scheme and expects to begin vetting applications from late August or early September.

The six-year scheme began accepting applications on May 1 for a three-month window. Earlier, Union Minister Ashwini Vaishnaw had told PTI that 70 applications had been received as of May.

What Is the ECMS?

It was earlier reported that the government planned to model the Electronics Components Manufacturing Scheme after its flagship Production Linked Incentive (PLI) scheme, which covers 14 sectors. However, the criteria for ECMS are different.

The scheme provides differentiated incentives to manufacturers, tailored to "overcome specific disabilities for various categories of components and sub-assemblies," the government stated in March when the Cabinet approved ECMS.

It offers government incentives based on production output, investment in setting up or expanding units, or job creation—depending on the sub-sector. The plan anticipates companies will invest around ₹59,400 crore and generate goods worth ₹4.56 lakh crore over six years (plus one year for setup).

According to Kotak Institutional Equities, the return on investment may be modest compared to other schemes, but the focus is on manufacturing higher-value components with better margins.

“An incentive payout of ₹23,000 crore against production of ₹4.6 lakh crore implies an incentive of about 5% of sales, similar to the mobile PLI,” the brokerage noted.

What Components Come Under the Scheme?

The Component PLI scheme targets four major sub-assembly areas to boost domestic electronics manufacturing: display modules, camera modules, bare components, and capital equipment. These categories cover a wide range of essential parts used in electronics, with tailored incentives to encourage local production and reduce import dependence.

For sub-assemblies, turnover-linked incentives are offered for the production of display and camera modules—critical components in devices like smartphones, laptops, and TVs.

The "bare components" category includes non-SMD passive components, electro-mechanical parts, multi-layer PCBs, lithium-ion cells for digital applications (excluding EVs and storage), and enclosures for mobile and IT hardware. These too receive turnover-linked support.

For more advanced manufacturing, select bare components such as High-Density Interconnect (HDI), Modified Semi-Additive Process (MSAP), flexible PCBs, and SMD passive components are eligible for hybrid incentives—a mix of turnover- and capex-linked benefits.

To strengthen the supply chain further, capex-linked incentives are offered for parts used in these sub-assemblies and for capital equipment used in electronics production. Together, these measures aim to build a self-reliant and globally competitive electronics manufacturing ecosystem in India.

Govt's Aim, Key Beneficiaries

During the scheme's announcement, the government said it aims to attract investment of ₹59,350 crore, generate production worth ₹4,56,500 crore, and create 91,600 direct jobs, along with many indirect ones.

According to Kotak, the key beneficiaries of the component PLI scheme are likely to include Dixon Technologies, Amber Enterprises, and potentially Kaynes Technology.

“As part of this scheme, we expect Indian EMS companies to form joint ventures with global peers to manufacture components in India. Clarity around the participation of Chinese suppliers—given their dominance in components—and tie-ups with leading global vendors will be key for Indian EMS players,” Kotak said in March.

Kotak expects Dixon to participate in areas such as display modules, camera modules, mechanical parts, and die-cuts. Dixon has already formed a joint venture with China’s HKC for display assemblies, and more partnerships are expected. Amber and Kaynes are likely to focus on PCB manufacturing, including multi-layered, HDI, and flexible PCBs. Amber has bolstered its position through the acquisition of Ascent Circuits, partnerships with Indian PCB makers, and a joint venture with Korea Circuit. Kaynes has also announced its entry into PCB manufacturing.