India’s electronics industry has yet to evolve to meet domestic demand. A key reflection of the underdeveloped state of the industry is that importing electronics is the third largest import item for the country and total electronics imports are projected to surpass $200 billion by 2022 if demand for electronics keeps pace with the current rate.
Faced with this backward state of the sector, the government introduced an incentive scheme called the Modified Special Incentive Package Scheme (MSIPS) in 2012 to encourage investment and production in the electronics sector. The policy aimed to create a native electronics manufacturing ecosystem in the country.
The incentive under the MSPIC program is in the form of a grant and is available for an initial project, project expansion (in terms of capital invested) or project diversification (variation in product range).
The government grants a 20% subsidy on investments in Special Economic Zones (SEZ) and 25% on capital investments in zones other than SEZ. Approval (date of submission of application, non-receipt of application). For projects with high capital investment, a refund of the central taxes and duties can be applied. This plan also provides incentives to transfer units from abroad to India.
The applicant is eligible to avail of this program if the investment is between 1 crore and 5000 crores depending on the type of project. For each product category, the government prescribes the investment threshold that the applicant must meet.
The applicant must provide the required information in the application form, which contains the following information:
- Applicant details
- Project proposal details
- Financial close details
- E-Manufacturing cluster details
- Details of the initial application fee (fee to be paid upon request)
Eligible applications will be processed within 120 days of Submission approval of the complete application.
The Department of Electronics and Information Technology will receive all initial applications under the MSIP program on or before the 26th of July 2020. The application form must be submitted online by the registered applicant along with a non-refundable application fee.
If the project cost is:
- Less than 10 crores, the initial application fee is Rs 10,000
- 10 to 100 crores, the initial application fee is Rs 25,000
- 100 to 1000 crores, the initial application fee is Rs 50,000
- More than 1000 crores, the initial application fee is Rs 1,00,000
The application form is divided into the following categories:
- Applicant details
- Electronic Manufacturing cluster details
- Project proposal
- The first phase of the project proposed for implementation
- Financial Closure details
- Initial application fee details
The documents mandatory for the application under the initiative are as follow:
- PAN, service tax and Central Excise Certificate for the applicant
- Copies of brief bio of Chairman, CEO and CXO’s applicant
- Copies of Annual Reports like Annual Financial reports with schedules of three years
- Two independent equity analyst reports for public listed companies
- Certificate showing shareholding pattern that indicates the number of shares and investment in case the applicant is a company registered under the Companies Act.