Cabinet approves amendment in Modified Special Incentive Package Scheme

• To boost electronic manufacturing in the country, the Union Cabinet on Wednesday approved incentives to the tune of Rs 10,000 crore for investors by amending the Modified Special Incentive Package Scheme (M-SIPS) scheme.
• The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for amendment in the Modified Special Incentive Package Scheme (M-SIPS) to further incentivize investments in Electronic Sector and moving towards the goal of ‘ Net Zero imports’ in electronics by 2020.
• The previous amendment in MSIPS in August 2015 had extended the scheme till July 27, 2020. However, the government decided to cut down the application window to December 2018, to attract serious players and expedite projects, said an official from the Ministry of Electronics and Information Technology.
• The Cabinet, however, has decided to review the decision on further financial commitments in case the incentive commitment of Rs 10,000 crore is reached.

The salient features of the amendment are:

1. The applications will be received under the scheme upto 31^st December 2018 or till such time that an incentive commitment of Rs 10,000 crore is reached, whichever is earlier. In case the incentive commitment of Rs 10,000 crore is reached, a review will be held to decide further financial commitments.
2. For new approvals, the incentive under the scheme will be available from the date of approval of a project and not from the date of receipt of application.
3. The incentives will be available for investments made within 5 years from the date of approval of the project.
4. Approvals will normally be accorded to eligible applications within 120 days of submission of the complete application.
5. A unit receiving incentives under the scheme, will provide an undertaking to remain in commercial production for a period of at least 3 years.
6. The Appraisal Committee recommending approval of project will be chaired by Secretary, Ministry of Electronics and IT.
7. A separate Committee headed by Cabinet Secretary and comprising of CEO, NITI Aayog, Secretary Expenditure and Secretary, MeitY will be set up in respect of mega projects, envisaging more than Rs. 6850 crore (approx. USD 1 Billion) investments.

Background

• The Cabinet had, in July, 2012 approved the M-SIPS to provide a special incentive package to promote large scale manufacturing in the Electronic System Design and Manufacturing (ESDM) sector.
• The scheme provides subsidy for capital expenditure – 20% for investments in Special Economic Zones (SEZs) and 25% in non-SEZs.  The   Scheme was amended in August, 2015   for scope enhancement and simplification of procedure.
• The Scheme has attracted investments in the ESDM sector to the tune of Rs. 1,26,838 crore, of which investments of around Rs. 17,997 crore have been approved by the MeitY.
• The M-SIPS has been able to create positive impact on investment in electronics sector.