IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 12 Jul 2012 | Removal date: open ended
Still in force

Production subsidy

On 12 July 2012, the Government of India approved the Modified Special Incentive Package Scheme (M-SIPS) to promote large scale manufacturing in the Electronics System Design and Manufacturing (ESDM) sector and create an indigenous manufacturing eco-system for electronics in the country.
 
The scheme provides a subsidy of 20% of the capital expenditure for units located in Special Economic Zones (SEZs) and 25% for non-SEZ units, where capital expenditure includes plant & machinery, land, building, and technology including R&D. Further incentives like reimbursement of excise or Countervailing Duty on capital equipment for all non-SEZ units and reimbursement of central taxes and duties for high technology and high capital units have been provided.
 
The scheme is applicable to investments in new ESDM units and expansion of capacity/modernization and diversification of existing ESDM units for 29 categories of ESDM products inlcuding for all products in the value chain, units providing services for such manufacture and also for relocated units from abroad.
 
The incentives are available for investments made within 10 years of the approval of the new unit. The overall financial ceiling for this programme is set to INR 10,000 crores (appx. USD 1.6 billion) during the 12th Five Year Plan.
 
The Special Incentive Package was originally introduced in 2007 but limited incentives for investments in manufacture of semi-conductors, LCD/LED or other emerging displays, solar cells, photovoltaics, other advanced micro and nano technology products. Apart from the addition of several new sectors, the MSIPS also has a larger budget for investments.
 
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries. 

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