Overview of the Electronic Industry

The Indian consumer market is very lucrative for entrepreneurs and manufacturers who want to boost their businesses quickly. The electronic devices and components manufacturing market have also proven itself by becoming the fastest-growing industry in the country. The Electronics System Design and Manufacturing (ESDM) industry comprises companies that design, manufacture, assemble, and electronic service products. The electronic products manufactured in this sector consist of materials, parts, components, subassemblies and equipment used in electronics performing significant functions. Products can range from discrete components like integrated circuits to consumer electronics like TVs, smartphones, personal computers, and medical equipment. The rollout of 5G spectrum and industrial use of Internet of Things (IoT) technology. Setting up electronic manufacturing might seem daunting, but taking small steps in the manufacturing path and later expanding can help tackle some challenges a new business faces. In this write-up, we will go through the avenues of the business setup process and how you can setup this incredibly profitable business. We will also understand the legalities associated with setting up a unit in the electronic industry.

Big units manufacture electronic items or source it from other manufacturers. On the other hand, manufacturing units specialise in a particular component of the electronic item. Depending upon the resources and expertise, the planning of the manufacturing process should be done. There are numerous electronic components in consumer items, and each may be created with multiple parts made by many manufacturers.

Advantages of Starting an Electronic Manufacturing unit in India

The Indian market is a prominent market where businesses can expand very fast. Electronic and IT items manufacturers can spread their business growth in Indian Electronic Industry. The Indian market has welcomed manufacturers that have proven to bring quality at affordable prices, especially in IT and Electronic items manufacturing.More than 1.3 billion consumers of the country use electronic devices and are engaged in rapid u digitisation with increasing penetration of electronic products in every corner of the country. India has the 3^rd largest startup ecosystem, Make in India" and "Digital India" initiatives, along with the government's impetus on EoDB.Production Linked Incentive Scheme (PLI) for large-scale Electronics Manufacturing It was notified by the government in 2020. It offered a production-linked incentive to boost domestic manufacturing and attract significant investments in mobile phone manufacturing and specified electronic components. Recently, the government approved a Second Round of the PLI Scheme. The target segment for the purpose of this round is Specified Electronic Components manufactured in the Indian electronic industry.

Licences and authorisation to start Electronics Manufacturing Plant

All the manufacturers need to follow some essential guidelines according to Indian rules who want manufacture IT and Electronic products. Electronic devices fall under the compulsory Registration Scheme and need a self-declaration of conformity. Therefore the goods falling under this category must be manufactured after submitting a self-declaration that they comply with the prescribed standards.

Consent Certificate

The manufacturer of electronics products must register with their concerned State Pollution Control Board or the Pollution Control Committee (SPCB/ PCC). As the electronics item's production can generate hazardous waste, the industry must obtain Consent NOC in the form of Consent to Establish (CTE) and Consent to Operate or CTO and comply with the compliances applicable. The documents required for this licence include

• Business Registration Certificate

• PAN Card of the Authorized Signatory
• GST Certificate
• Layout plan/ site plan
• Process flow chart
• Proof of ownership of site/ rent agreement
• Balanced sheet by CA
• Proof and details of air and water pollution control devices and waste management authorisation (solid waste/hazardous waste management and location, capacity and exit points of the discharge from the premises)
• Lab report of the trade emissions and effluents
• Copy of any permission required from the state government, such as environmental clearance
• Any specific document specified by the concerned Board.

Factories Licence

Manufacturing units falling under the definition of factories under the Factories Act, of 1948 must obtain this licence from the labour department of the concerned state. The chief inspector is the authorised entity that grants this licence. Documents required for registration under Factories Act include

• Existing building plan
• Construction completion report.
• NOC from other partners or Board Resolution by Directors for the nomination of the occupier under sections 2(n) and 7 of the Factories Act, 1948.
• Proof or supporting documents of Occupier as Director/ Proprietor of the factory.
• Proof of sanctioned load of electricity (copy of electricity bill).
• Proof of occupancy (copy of rent agreement/ownership proof).
• Flow chart of the manufacturing process
• Requisite Fee as per fee structure notified by the respective state
• Resolution of Director/partners nominating one to act as an occupier under section 2(n) of the Factories Act.
• Original copy of Stability Certificate issued by a competent person.
• Safety & Health Policy (if applicable)
• List of raw materials in the manufacturing process.
• List of machinery installed on the premises

BIS Registration

Electronics manufacturers must ensure that their products fall under the specific standards laid by the BIS for the category in which the product falls. BIS will grant a licence to the manufacturer to use or apply a standard mark with a unique R- number.

Fire NOC: it is issued by the State fire department or Urban Development and Housing (ULBs) This certificate is issued after ensuring that the structure has been constructed keeping in mind the fire safety protocols and is equipped with fire safety measures. This licence is issued within 60 days for new applications and 30 days for renewal.

RoHS certificate: The RoHS certificate stipulates that the electronic products circulating in the Indian market must not contain harmful chemicals. All electronic companies that want to do business again in India must obtain a RoHS certificate. The regulation on the restriction of the use of certain hazardous substances in electrical and electronic equipment is necessary for all products manufactured and sold in India.

Scope of the Electronic Industry

In this age of technology, the customer prefers to buy a well-designed and engineered product. One other feature which is very important in India is to make products repairable and upgradable with the possibility of being refurbished. With per capita income and private consumption doubling between FY12 and FY21, India has emerged as one of the world's largest markets for electronic items. India expects to have a digital economy of 1 trillion dollars by 2025. India is committed to reaching $300 bn worth of electronics manufacturing and exports by 2025-26. India’s domestic production in electronics increased from $ 29 Bn in 2014-15 to $ 67 billion in 2020-21.India's semiconductor market is also expected to increase from ~$ 15 billion in FY20 to ~$ 110 billion in FY30, growing at a CAGR of 22%. India's exports are set to increase rapidly from $ 10 billion in FY21 to $ 120 billion in FY26.

FDI inflow stood at $45.15 billion in 2014-15 and has consistently increased. Moreover, total FDI inflow grew by 65.3%, i.e. from $266.21 billion in 2007-14 to $440.01 billion in 2014-21 and FDI equity inflow also increased by 68.6% from $185.03 billion during 2007-14 to $312.05 billion (2014-21). Top sectors receiving the highest FDI Equity Inflow during FY 2021-22 included the computer software and hardware services sector (Finance, Banking, Insurance, Non-Fin/Business, Outsourcing, technology testing and analysis etc.), automobile industry, trading and construction (Infrastructure) activities.

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