Modified Special Incentive Package Scheme

Modified Special Incentive Package Scheme: The 3rd largest imports of our country are electronic goods. After becoming the world’s manufacturing factory, China has continued to flood the world market with its electronic goods. But the Indian electronic manufacturing sector has not taken the giant leap to meet the domestic demands. If the current state of demand & domestic supply for electronic goods continues for the next 5 years, it is estimated that the electronic goods become the 2nd largest category in our imports. Keeping this in view, the government of India in 2012 launched an incentive scheme called “Modified Special Incentive Package Scheme (M-SIPS)”.

Objectives of Modified Special Incentive Package Scheme:

This scheme was initiated with an objective of promoting large-scale manufacturing in the Electronic System Design and Manufacturing (ESDM) sector in India by providing various incentives to the participants. This initiative was aimed at creating an indigenous manufacturing eco-system for electronics in the country alongside of creating employment opportunities. Narendra Modi government has added an ambitious bid of achieving net zero imports of the electronic goods by 2020.


Following are the incentives provided under this scheme

1 Capital expenditure  subsidy of 25% in non-SEZ and 20 % within SEZ
2 Reimbursement of CVD/excise for capital equipment for non-SEZ units

Reimbursement of central taxes and duties for 10 years in select high- tech Units like fabs.

The capital expenditure includes not only expenditure incurred on plant, machinery and equipments, tools etc but also expenditure incurred on captive power plant, utilities machines and captive R&D including cost of IPRs, copyrights etc. It also includes cost of land and building not exceeding 2% of the total project capital expenditure.

The above incentives are available for investments made in a project within a period of 10 years from the date of approval. The scheme is available for both new projects and expansion projects. The incentives are available for units all across the value chain starting from raw materials including assembly, testing, packaging and accessories and covering almost all verticals of Electronic System Design and Manufacturing products.

Progress & Amendments by Modi Government:

Over the years, there was no substantial investment that this scheme could mobilize making it inevitable to review and revise the provisions. Also, the scheme was initially opened for 3 years till 26-07-2015. Government of India headed by Prime Minister Narendra Modi amended the schemes which are given below

  1. The term of the scheme has been extended up to 27-07-2020
  2. The scope of the scheme has been broadened extended to cover additional verticals
  3. The procedure for grant of approval has been simplified and streamlined. The incentives will be available for investments made within 5 years from the date of approval of the project.
  4. The applications will be received under the scheme up to 31st 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.
  5. 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
  6. Approvals will normally be accorded to eligible applications within 120 days of submission of the complete application.
  7. A unit receiving incentives under the scheme will provide an undertaking to remain in commercial production for a period of at least 3 years.
  8. The Appraisal Committee recommending approval of project will be chaired by Secretary, Ministry of Electronics and Information technology.
  9. A separate Committee headed by Cabinet Secretary and comprising of CEO, NITI Aayog, Secretary Expenditure and Secretary, Ministry of Electronics and Information Technology will be set up in respect of mega projects, envisaging more than Rs. 6850 crore (approx. USD 1 Billion) investments.

For the entrepreneurs who want to take plunge and exploit the immensely available opportunities in Design & manufacturing of electronic systems, this scheme is a boon. For more details please visit