Manufacturing units paid Rs 35,634 crore GST under previous electronics manufacturing incentive scheme

NEW DELHI: Manufacturing units paid Goods and Services Tax (GST) worth Rs 35,634 crore under a previous electronics manufacturing incentive scheme where the subsidy provided was just Rs 1,021 crore, indicating substantial cost benefit for the government and expectations that GST will only increase under the new Production-Linked Incentive (PLI) scheme.

According to government estimates, about 223 applicants invested Rs 23,991 crore under the Modified Special Incentive Package Scheme, which was revised in 2015.

These investments were led by companies like Samsung, Bosch, Sterlite and Chinese mobile phone manufacturers such as players like Vivo and Oppo.

The scheme provided a major boost to electronics manufacturing in the country, but after it closed last year, the government followed it up with three mega incentives totalling Rs 50,000 crore, with a significant chunk reserved for the PLI scheme.

“These numbers show a great cost-benefit analysis for the government, where in return for just Rs 1,021 crore subsidy disbursed so far, the tax collections have already surpassed Rs 35,634 crore,” a senior government official said, adding that new schemes like the PLI will further drive this trend.

Estimates also show that total sales by these units, including domestic and exports, were at Rs 3,17,490 crore, of which total exports were Rs 41,398 crore. The total employment generated was over 200,000.

The estimates, by the Ministry of Electronics and IT, also point out that out of 223 applications, 196 have already started production. The scheme promised capital subsidy in the range of 20-25% apart from other incentives.

“While MSIPS laid a solid foundation for growth of electronics manufacturing in India by bringing big electronics companies to India, more targeted incentives like Production-Linked Incentive (PLI) and Scheme for Promotion of Electronics Components and Semiconductor (SPECS) and Electronics Manufacturing Cluster 2.0 will enhance value addition and diversify the portfolio of manufactured items,” said the official.

The PLI scheme, launched earlier this year, received responses from the likes of iPhone contract makers Foxconn, Pegatron and Wistron, as well as Samsung, Karbonn, Lava and Dixon, and will lead to manufacturing worth Rs 11.5 lakh crore.

Of this, they will export products worth Rs 7 lakh crore in the coming five years, leading to 300,000 direct jobs and 900,000 indirect jobs.

The success of the scheme, especially the PLI for mobile manufacturing, made the government unveil similar schemes for 10 more sectors such as automobiles, pharmaceuticals, solar and textiles with a total outlay of Rs 1.46 lakh crore. The government has also announced PLI for laptops, tablets, telecom equipment and servers.

The value of domestic production of electronics has also trebled in the last five years, from $29 billion in 2014-15 to $75.7 billion, with exports close to doubling to $11.7 billion.

“The revenue earned through corporate tax and personal income tax paid by employees could not be ascertained, if that is added, the revenue earned by the government through investments made in the subsidy schemes will increase further,” the official added.

Manufacturing units paid Rs 35,634 crore GST under previous electronics manufacturing incentive scheme Manufacturing units paid Rs 35,634 crore GST under previous electronics manufacturing incentive scheme Reviewed by TechCO on 12/25/2020 Rating: 5

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