New electronics component scheme maybe outside Budget, SPECS revival unlikely: IT Secy

“There won’t be a SPECS 2.0. One portion of what the scheme covered will be the new component scheme, the other portion which is related to semiconductor will be covered separately," he said in an interview.

He noted that the government was conscious that electronics component manufacturing has to be encouraged and was taking the steps required, but that the department was yet to present the specific contours of the scheme to the finance ministry, after undertaking extensive consultations with the industry.

He added that the ongoing ₹76,000 crore financial incentive scheme for setting up semiconductor fabs, assembly, testing and packaging units still had about ₹7,000 crore that was yet to be committed. The remaining corpus could cover some of the proposals that require lower incentives than the large scale projects being set up, including a fab and packaging unit by the Tata group and several packaging units by companies including US-based Micron and Murugappa Group’s CG Power.

Read more: Niti Aayog pitches for incentives, tariff changes to boost electronics industry

On the next round of incentives for the semiconductor fabs, Krishnan said, “Our case would be that the job is not yet done. We would need at least 2-3 more fabs and some other facilities in the country. We’ll have to decide the structure." 

Mint had reported in March that the government was looking at a fresh round of financial incentives for the segment. He also highlighted the need for the design and supply chain ecosystem to develop, for which some other incentives would have to be devised.

For the concessions in the electronics component scheme as well as reducing import or custom duties on some of the sub-assemblies to these components, the government will look at it on a per-component basis -- whether that component can be built locally and production can be scaled up to enable exports to fit into the global value chain.

“Globally, and definitely in India, nobody is now looking at customs duty as a source of revenue as such. If there is a possibility of greater production domestically then we'll have to look at that, if you drop the customs duty on that then you're killing it even before it starts. We will have to look at it carefully, component by component. Also, the components which we pick to support, we should be capable of exporting it as competence themselves," he noted.

“Electronics is going to be a large chunk of whatever happens globally in manufacturing and India should have a significant position there because you're going to be a big market. We have to have a significant share of that value chain, we must increase value addition from 18-20% now to 35-40%," he added.

Read more: Electronics industry seeks incentives to boost Make in India

Building Indian brands and products in electronics is also among the priorities for the government, he said, and to address this a task force under the Principal Scientific Advisor has been set up which will give its recommendations on making India a product nation. 

“It is a very important priority, the minister has also said that he would like to see an Indian-designed phone. And we have to do it now," he said.

Krishnan also said that the government will begin analyzing import data of laptops, servers and other IT hardware products, on a quarterly basis, before deciding on implementing the import management system that effectively bans imports of these products outside a licensing regime, expected to kick-in by November this year.

“We’ve never said that there will be non-tariff barriers that will come in. We have to start looking at the import data closely, and figure out what needs to happen. It is also about trusted sources which is becoming increasingly important, and everywhere in the world they're recognizing that in IT hardware, trusted sources are important," he said.

In response to a question on rise in imports of laptops and other IT hardware products in the early months of the year owing to the anticipated monitoring system to come into effect, he said that the government would undertake a deep analysis of the reasons behind the alleged rise on a quarterly basis, before taking a decision.

The government is also evaluating whether it can bring out separate three to four laws addressing specific issues, such as misinformation and deepfakes, rather than a comprehensive Digital India Act, Krishnan said. 

The DIA was intended to replace the IT Act in the previous term of the government but it will require a far higher volume of consultations and time to bring out a comprehensive law, whereas issues that are presented by malicious deepfakes and misinformation, for instance, were needed to be dealt with on an urgent basis.

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The top official in the ministry said that the government was evaluating whether it can look at bringing out the legislation in three or four parts, depending on the requirement by the market and industry, and whether there was an urgency to make it one comprehensive legislation. “If on the other hand, the feeling certain things need to go faster and certain others we can wait and consultation can come later, then we could take an approach of having legislation on those pieces alone separately," he said, adding that a call on comprehensive replacement of the law was not an immediate compulsion.

Krishan said that the government was also assessing two approaches of a viability gap funding to people building AI compute capacities or giving subsidies under a voucher system when using a particular configuration of GPUs, under the AI Mission.