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Fiscal Incentives Introduced To Boost Industry

15 Nov 2012

As part of the Central Government's efforts to grow the Electronic System Design and Manufacturing (ESDM) sector in India, the Union Cabinet approved granting fiscal incentives to the sector in the form of the Modified Special Incentive Package Scheme (M-SIPS). Taxand India discusses the fiscal incentives introduced by the government to promote the industry.

The evolution of the Scheme stems from the present scenario of various impediments inthe manufacture of these products like high cost of power and finance, high transactional costs and poor base of supply chain.

The Indian government is providing fiscal incentives such as:

  • Reimbursement of CVD/ excise for capital equipment for the non-SEZ units.
  • Reimbursement of central taxes and duties for units manufacturing intermediary products, like "Fabs" involved in semi-conductor wafering and chips, LCDs, etc.

Other fiscal incentives include:

Type of unit

Incentive in SEZ

Incentive in non-SEZ

New Unit in ESDM sector

20% of capital expenditure

25% of capital expenditure

Existing unit in ESDM sector expanding its capacity/ modernisation and diversification

20% of additional fixed capital investment in plant and machinery

25% of additional fixed capital investment in plant and machinery

Taxand's Take

The Union Cabinet has recently granted its approval to the National Policy on Electronics (NPE). As part of the NPE, apart from notifying fiscal incentives in the form of M-SIPS, the Central Government has already approved proposals relating to providing fiscal incentives to Electronic Manufacturing Clusters (EMCs), providing preferential market access to domestically manufactured electronic goods, and mandating standards and registration of electronic products with BIS to ensure meeting safety standards.

Your Taxand contact for further queries is:
Gokul Chaudhri
T. +91 124 339 5040

Taxand's Take Author