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The Ministry of Electronics and Information Technology (Meity) is looking at a proposal to generate 1.5-2 direct jobs for every Rs 1 crore invested by companies under the proposed electronic components production-linked incentive (PLI) scheme.
If this plan fructifies, a Rs 10,000 crore investment under the proposed PLI scheme would bring with it the expectation of creating 15,000-20,000 direct jobs in electronic components sector.
The ministry is also discussing two alternative proposals to link the electronic components PLI scheme with employment generation.
One proposal is to provide eligible companies an additional incentive if they meet their employment commitment year-on-year. The second is to reimburse incentives if eligible companies also meet their mandatory minimum employment targets set by the government.
A senior Meity official said: “At an average overall level, we are looking at generation of direct employment for 1.5-2 people at a minimum for every Rs 1 crore investment made under the PLI scheme.”
In meetings held between Meity and the stakeholders recently, the latter have raised some key concerns on the scheme.
One is how the government will monitor new job creation due to the peculiarities of the electronics industry.
A senior executive of an electronic components company, said: “In electronics, you have large contract labour usage on a regular basis, especially when, say, a mobile phone client is launching a new phone.
"So, extra contract labour works for 3-5 months and comes again next year.
"To monitor this, the government will require big machinery across so many component makers.”
The government already monitors contract labour for the PLI scheme for mobile devices.
But job commitments made by an eligible player is not a mandatory requirement for reimbursement of incentives.
This is unlike the proposal being discussed for the electronic components PLI.
Two, many say that linking eligibility of incentives directly with meeting employment targets might be counter productive.
Stakeholders argue that as the scheme will be for five years, it does not take into consideration that the job numbers may change.
These numbers may come down with new technology usage, which is common in electronics.
Without incorporating these technologies or automation, they cannot be competitive, they said.
They find the additional incentive scheme proposal more rational and effective.
The proposed scheme — for which over Rs 35,000 crore is expected to be earmarked — will cover a range of components.
The focus will be on manufacturing of sub assemblies like camera modules, display assemblies, mechanical parts, battery packs and vibrators, among others, as well as key areas like manufacturing printed circuit boards (PCBs).
The component scheme aims to add value to electronics finished products from mobile devices, laptops, PCs and servers, among others.
Currently, value addition in mobile devices manufactured in India is only 20 per cent and it is overly dependent on China for components.
As a result, the import bill for electronic components is only increasing with more local production of finished items.
Investment estimates vary widely. Some stakeholders, in their discussion with the government, have pegged it to over Rs 40,000 crore or even Rs 80,000 crore.
However, at least one stakeholder association has conveyed to the government that it sees a visibility of Rs 15,000-18,000 crore based on feedback from Indian and global companies.
These firms have shown an interest in investing but say an outreach programme will be needed to cater to more global players.
Meity has made it clear that there is no problem of finding money for the scheme from the government.
But it added that a clear picture is needed on which companies from India and abroad are ready to commit investments.
This is primarily to avoid challenges faced in many PLI schemes like mobile devices where many of the eligible Indian and global companies have failed to get an incentive.
They could not meet production or investment targets.
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