Push for electronics production, sops for central govt staff

The government on Friday took another step towards strengthening India's manufacturing base by approving an incentive scheme worth ₹22,919 crore ($2.7 billion) for electronics component production, while also granting a 2% hike in dearness allowance (DA) and dearness relief (DR) for central government employees and pensioners.

The twin measures, along with the clearance of a major infrastructure project in Bihar, signal the government's continued focus on boosting industrial growth and public welfare.

The electronics component manufacturing scheme is aimed at reducing India’s reliance on imports and enhancing the country's competitiveness in global supply chains. Union electronics and IT minister Ashwini Vaishnaw stated that India is pushing to increase its share in global electronics exports.

"We expect to double electronics exports in the next 3.5 to 4 years from ₹2.5 trillion," he said. The scheme introduces three forms of incentives—employment-linked benefits, capital expenditure support, and turnover-linked incentives. The areas of focus of include sub-assembling of display and camera modules, printed circuit boards, lithium-ion battery cells, and enclosures for mobile and electronics hardware. The government is also considering rationalizing customs duty structures to make domestic manufacturing more competitive.

With India already achieving 20% domestic value addition in electronics manufacturing within a decade, Vaishnaw emphasized the need to target 40% within the next five years by focusing on both passive and active component production.

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The initiative is expected to attract investments of ₹59,350 crore and generate over 91,600 direct jobs, apart from indirect employment opportunities. The move complements the government’s larger manufacturing push, which includes the ₹1.97 trillion production linked incentive (PLI) schemes covering 14 key sectors.

Commenting on the development, Ajai Chowdhry, founder, HCL and chairman, EPIC Foundation said, “This (the scheme) will enable much higher value addition in the country for electronics manufacturing and will attract more investments in system products as local availability will enable just-in-time manufacturing.”

Electronics manufacturing company Zetwerk said it is actively engaging with partners and is open to collaborations to build a strong component ecosystem in India.

“With this forward-looking policy, we are confident that it will accelerate the growth of high-value electronics, increase value addition, and create opportunities for innovation and employment,” said Josh Foulger, president (electronics) at Zetwerk.

The cabinet also approved a 2% hike in DA and DR, effective 1 January 2025, to provide relief against inflationary pressures. The increase raises the rate from 53% to 55% of basic pay or pension, benefiting around 48.66 lakh employees and 66.55 lakh pensioners.

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"The adjustment follows the Seventh Central Pay Commission’s recommendations and aligns with its commitment to safeguarding purchasing power amid rising costs," said Vaishnaw.

Additionally, the cabinet allocated ₹37,216.15 crore for the Nutrient Based Subsidy (NBS) scheme for kharif 2025, ensuring the availability of phosphatic and potassic fertilizers at controlled prices. The subsidy outlay is notably ₹13,000 crore higher than the previous Rabi season, reflecting the government’s strategy to maintain price stability in the agricultural sector, the minister said.

In a significant infrastructure boost for Bihar, the government approved the construction of the Patna-Arrah-Sasaram corridor with a total capital cost of ₹3,712.40 crore. The cabinet approved the inclusion of the Kosi-Mechi Intra-State Link Project under the Pradhan Mantri Krishi Sinchai Yojana with an estimated of cost ₹6,282.32 crore, which will receive central support of ₹3,652.56 crore, and is expected to be completed by March 2029. The move is seen as part of a broader push to enhance connectivity and economic development in the state, with potential political implications as Bihar remains a key electoral battleground.

With the state set to go to assembly elections in November, the announcement is viewed as a strategic effort to bolster the government's appeal among voters by showcasing its commitment to infrastructure development.

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