To break deadlock between ministries, govt to tweak M-SIPS norms

NEW DELHI: The government has decided to take some sheen off its programme to boost electronics manufacturing by capping the total incentives under the scheme and reducing its implementation period to three years, to break a deadlock between the ministries of IT and finance.

Under the Modified Special Incentives Package Scheme (M-SIPS), approvals have been stuck for almost a year after the finance ministry raised some concerns over the scheme, calling it “open-ended.“

The ministry of electronics and IT (MeitY) has agreed to revise it so that applications under the scheme will be received only till December 2018 or till the total incentive threshold of Rs 10,000 crore is reached, the period of its implementation will be reduced from 10 years to three, and no incentives will be provided for relocation of existing schemes, said an official familiar with the discussions.


In a meeting chaired by principal secretary to the prime minister, it was decided MeitY will take a fresh nod for the revised scheme from the Cabinet before approvals begin.

The M-SIPS policy incentivises electronics and component makers to manufacture locally by providing them a host of incentives including 20-25% subsidy on capital expenditure.

Official think-tank NITI Aayog is expected to take a decision on the matter in case the incentive threshold is reached before the end of 2018, the official said.

Reduction in the period of implementation means incentives under the scheme will be available for investments made within three years since approval of a project.

According to the official, apart from the future applications, the ministry has been asked to explore if the new rule can be applied to projects already approved. Also, a unit that has been given incentives under the scheme has to be in production for at least three years. So far, proposals worth Rs 18,000 crore have been approved under the programme with an estimated subsidy of around Rs 4,000 crore to be paid over 10 years.

MeitY has requested for funds to the tune of Rs 287 crore for the current financial year, Rs 600 crore for 2017-18 and Rs 900 crore for 2018-19 under M-SIPS.