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July 16, 2020

Know all about Modified Electronic Manufacturing Clusters Scheme

by Rubina Dsouza in Compliance Law

Know all about Modified Electronic Manufacturing Clusters (EMC 2.0)

What are the issues that led to the implementation of Electronics Manufacturing Clusters (EMC) Scheme?

  1. Manufacturing base of electronics products in the country is grossly inadequate in comparison to demand of such goods.
  2. Even where products are manufactured in India, the extent of domestic value addition is low.
  3. One of the critical constraints in the way of attracting investments for manufacturing is lack of availability of reliable and quality infrastructure for growth of industries and its dispersal across the regions.
  4. To promote industrialization and growth of electronics manufacturing in the country, the Government notified Electronic Manufacturing Clusters (EMC) Scheme in October, 2012 to provide support for creation of world-class infrastructure for attracting investments in Electronics Systems Design and Manufacturing (ESDM) sector. (it was closed from Oct 17)

What led to the implementation of the Modified Electronic Manufacturing Clusters (EMC 2.0) Scheme?

  1. An evaluation of the EMC Scheme was conducted  and based on the encouraging response of all stakeholders including the industry and their intent to set up manufacturing operations in EMCs, it was stated that the Scheme acted as enabler to create foundation for electronics manufacturing along with its value chain.
  2. Therefore, the EMC Scheme needed to be continued in modified form to attract both global and domestic investors to commence production within such EMCs which in turn will ensure greater integration with the global value chains in electronics manufacturing sector.
  3. Ministry of Electronics and Information Technology, therefore, proposed to introduce a Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme to compliment the efforts put-in by the Government to make India an Electronics Manufacturing Hub as envisaged under “Digital India” and “Make in India” initiatives.
  4. These EMCs would aid the growth of the ESDM sector, help development of entrepreneurial ecosystem, drive innovation and catalyse the economic growth of the region by attracting investments in the sector, increasing employment opportunities and tax revenues.

What are the features of the Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme?

Under EMC 2.0 Scheme, Electronics Manufacturing Clusters would be established

  1. to create infrastructure with common facilities and amenities in EMC projects and
  2. upgrade the infrastructure in Industrial Estates / Parks / Areas as Common Facility Centre (CFC)

for attracting investment in electronics manufacturing.

The scope will cover components that are need based and identified through a feasibility study report to be prepared by the Project Implementing Agency.

What agencies are formed for the implementation of this scheme?

1.EMC Project

EMC Project would be an undeveloped / underdeveloped geographical area, preferably contiguous, where the focus is on development of basic infrastructure, amenities and other common facilities for the ESDM units.

2. Common Facility Centre (CFC):

There should be significant number of existing ESDM units located in the area and the focus is on upgrading common technical infrastructure and providing common facilities for the ESDM units in existing EMCs, Industrial Estates / Parks / Areas.

3. Anchor Unit(s)

They are electronics manufacturing company (ies) with a commitment of purchasing minimum 20% of the saleable / leasable land area in the proposed EMC project for setting up electronics manufacturing facility in the EMC and will give a commitment of an investment of Rs. 300 crore or above.

4. Project Management Agency (PMA)

They are agencies in form of an autonomous body (Society or PSU) under the Ministry of Electronics and Information Technology (MeitY), Government of India. Such agency will act as PMA and be responsible for providing secretarial, managerial and implementation support and carrying out other responsibilities as assigned by MeitY from time to time.

5. Project Implementing Agency (PIA):

They are agencies who submit the project application to PMA. The applications under the Scheme can be made by State Government or State Implementing Agency (SIA) or Central Public Sector Unit (CPSU) or State Public Sector Unit (SPSU) or Industrial Corridor Development Corporation (ICDC) such as DMICDC, etc. (as the case may be).

6. Project Review Committee (PRC):

It is a Committee constituted by MeitY under the chairmanship of an officer not below the rank of Joint Secretary in MeitY for consideration of the application(s) for accord of approval under the Scheme. PRC will comprise of representatives from other Ministries, departments and organizations. The PRC will make recommendations to PMA for approval / rejection of the applications under EMC 2.0 Scheme. PRC will also review the progress of the approved projects. Meeting of the PRC will be convened from time to time and as and when required. Detailed constitution, functioning and responsibilities of the PRC will be elaborated in the Scheme Guidelines.

7. Governing Council (GC):

This committee shall be constituted by MeitY under the Chairmanship of Secretary, MeitY. GC will comprise of experts from Government and Industry. GC will periodically review the progress of the Scheme and the projects thereof. GC will be the authority to make improvements / modifications (if required) in the Scheme Guidelines from time to time for successful implementation of the Scheme. Detailed constitution, functioning and responsibilities of the GC will be elaborated in the Scheme Guidelines.

What is the mode of application under EMC 2.0 Scheme?

  1. The application under EMC 2.0 Scheme will be submitted by the State Government, SIA, CPSU, SPSU or ICDC such as DMICDC, etc. (as the case may be) to PMA along with the details of the Anchor unit(s) clearly mentioning the roles and responsibilities of PIA and the relevant Anchor Unit(s).
  2. In case of CPSU or SPSU, the application would be submitted along with recommendations of the concerned Central Government or State Government (Administrative Ministry or Department) as the case may be.

What are the conditions to be followed by the applicant under EMC 2.0 Scheme?

  1. There should be a commitment from Anchor Unit(s) or industry for purchasing or leasing atleast 20% of the saleable / leasable land area and a minimum investment commitment of Rs.300 crore;
  2. Land parcel >= 200 acres
  3. Land parcel >= 100 acres (for North-Eastern States, Hill States and Union Territories)
  4. Minimum investment commitment from Anchor Unit(s) or industry for projects in these regions = Rs.150 crore.
  5. The proposed land parcel should be in possession of the PIA and preferably contiguous. Maximum of two land parcels within a radius of 1⁄2 Km will be considered as contiguous. Land parcels across the road will also be considered as contiguous.
  6. If any existing cluster under the EMC Scheme is taken up for expansion and adjoining land is proposed to be developed under EMC 2.0 Scheme, the land with the existing manufacturing unit will also be considered as part of the land parcel.
  7. This will be subject to the condition that in the existing EMC, 80% of saleable / leasable land should have been allotted to the manufacturing units and atleast 50% of units who have been allotted land should have started production activity. In such cases, following conditions on land requirements will be applicable :-

i. Atleast 100 acres of such land parcel that is adjoining the existing EMC will be considered for meeting the minimum land requirement for making application under the Scheme.

ii. For all North-Eastern States, Hill States and UTs, atleast 50 acres of such land parcel that is adjoining the existing EMC will be considered for meeting the minimum land requirement for making application under the Scheme

8. The proposed land parcel should be non-encumbered (free from legal & financial liabilities) and for Industrial use.

9. For CFC, there should be at least 5 electronics manufacturing units identified as users of the facility

10. PIA will provide Ready Built Factory (RBF) Sheds / Plug & Play facility in at least 10% of the saleable / leasable land within the EMC.

What financial assistance will be given under EMC 2.0 Scheme?

1.For EMC Project:

i. Maximum financial assistance = 50% of the project cost

ii. The assistance is subject to a ceiling of Rs. 70 crore for every 100 acres of land.

iii. For larger areas, pro-rata ceiling would apply but not exceeding Rs.350 crore per project.

iv. The remaining project cost will be borne by State Government, SIA, CPSU, SPSU or ICDC such as DMICDC, etc. (as the case may be) with a minimum contribution of 50% of the project cost.

2. For Common Facility Centers (CFCs):

i. Maximum financial assistance = 75% of the project cost

ii. The assistance is subject to a ceiling of Rs.75 crore.

iii. The remaining project cost will be borne by State Government, SIA, CPSU, SPSU or ICDC such as DMICDC, etc. (as the case may be) with a minimum contribution of 25% of the project cost

The list of eligible activities is annexed at the end of this article.

EMC Project Preparation, Appraisal and Release of Funds:

  1. The project application submitted by PIA to PMA including details of infrastructure requirements and common facilities for the specific EMC Project.
  2. Application shall include data, surveys, projections and feasibility on growth potential of the EMC.
  3. The PIA may actively involve Anchor Unit, support from institutions like R&D institutions, financial institutions, State Governments, wherever necessary.
  4. PMA will appraise the application(s) with the help of professional consulting agency (ies) or financial institution(s)
  5. PMA will submit the appraisal report of the projects for consideration of the Project Review Committee.
  6. PRC will make its recommendations to the PMA for accord of approval / rejection of the projects.
  7. Based on the recommendations of the PRC, PMA will obtain necessary approvals from the competent authority in accordance with Delegation of Financial Power Rules (DFPR) for issuing the approval(s) to the project(s).
  8. The functioning and responsibilities of PMA will be elaborated in the Scheme Guidelines. The selection / location of the EMC shall be taken up by the PIA in consultation with the Anchor Unit(s) / Industry.

How will funds be released under EMC 2.0 Scheme?

The release of funds will be project specific and on pari-passu basis and will be released in 3 instalments in the following manner:

  1. 1st instalment – 30% will be released on approval of the project as an advance.
  2. 2nd instalment – 40% will be released after utilization of the first instalment and achievement of specific milestones related to infrastructure development and allotment of land to Anchor Unit.
  3. 3rd instalment – 30% will be released after completion of the project.

How is monitoring and evaluation carried out under EMC 2.0 Scheme?

  1. The progress of the Scheme will be reviewed through a GC constituted by MeitY under the chairmanship of Secretary MeitY.
  2. GC will periodically review the progress of the Scheme and the projects thereof.
  3. MeitY will carry out a mid-term evaluation of the Scheme after 3 years from the date of notification and will propose any modifications/amendments, if required, for successful implementation of the Scheme.
  4. It will engage the services of an independent agency to carry out such mid-term evaluation and another evaluation after end of the Scheme period.

What are the timelines under EMC 2.0 Scheme?

  1. The Scheme will be open for receipt of applications for 3 years from the date of notification.
  2. Further period of 5 years shall be available for disbursement of funds to the approved projects.

Annexure – List of eligible activities under EMC 2.0 Scheme

1.Vital Services

i. Boundary Wall

ii. Internal Roads

iii. Storm Water Drains

iv. Electric Sub-Station/Distribution Network

2. Essential Services

i. Waste Disposal/Recycling

ii. Water Recycling/Water Treatment Plant

iii. Effluent Treatment Plant

iv. Sewage Lines

v. e-waste Management

vi. Street Lighting

vii. Backup Power Plant

viii. Warehousing

ix. Ready Built Factory sheds (RBF)/Plug & Play Facility

x. Fire Fighting and Safety services

3. Desirable Services:

a. Welfare Services

i. Employee Hostel

ii. Hospital and ESIC

iii. Recreational Facility/Playground

iv. Creche/Nursery

v. Educational Facilities

vi. Banking & Financial Services.

b. Support Services

i. Centre of Excellence (R&D, Incubation and Consultancy Services)

ii. Skill development Centre/Training Facility

iii. Auditorium & Conference Facility

iv. Video Conferencing, IT & Telecom Infrastructure

v. Business, Trade &Convention Centre

c. Manufacturing Support

i. Tool Room

ii. CAD/CAM Design House

iii. Plastic Molding/Cabinet Manufacturing

iv. Sheet Metal Stamping

v. Packaging/Epoxy Suppliers

vi. Testing and Certification Facility

vii. Component Testing (Safety, Life Test, Reliability/Environment, Electrical & mechanical properties, RoHS testing, EMI/EMC testing, CRO compliance)

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