The government is reportedly planning to allocate Rs 40,000 crore for a new manufacturing scheme set to be rolled out this year, according to the Economic Times. This initiative aims to encourage applicants to invest approximately Rs 82,000 crore, with the total value of the produced components expected to range between Rs 1.95 to 2 lakh crore.

Out of the Rs 40,000 crore allocation, Rs 19,800 crore will be earmarked for operational expenditure subsidies, while Rs 13,000 crore will be directed towards capital expenditure subsidies. The remaining Rs 12,000 crore will be allocated as a combination of both capex and opex subsidies. The finer details of the scheme are still being finalized, according to an official source.

Earlier this year, in June, the government invested Rs 8,803.14 crore under a similar scheme to promote the manufacturing of electronic components and semiconductors. The current plan is expected to adopt a three-pronged approach, offering subsidies as either capex, opex, or a mixture of both.

Certain types of companies are likely to receive different forms of subsidies. For instance, companies producing non-solder masked passive components, flex PCBAs, and sub-assembly display and camera modules may receive only operational expenditure subsidies. In contrast, manufacturers of lithium-ion cells may solely qualify for capital expenditure subsidies. Companies that produce printed circuit boards (PCBs) with eight layers or more might be eligible for both operational and capital expenditure subsidies.

This initiative builds on the Production-Linked Incentive (PLI) scheme launched in April 2020, which aims to boost domestic manufacturing and attract investment in the mobile phone value chain, including electronic components and semiconductor packaging. The PLI scheme, offering incentives of 3 to 6 percent for large-scale electronics manufacturing, has already seen an investment of Rs 8,390 crore as of June 30, resulting in increased sales of electronics produced in India over the past five years. The scheme has supported production amounting to Rs 5,14,960 crore to date.