Electronics Component Manufacturing Scheme, 2025

What it does

The Electronics Component Manufacturing Scheme (ECMS) was notified by the Ministry of Electronics and Information Technology (MeitY) on 8 April 2025 under F. No. W/49/2024-IPHW, with an outlay of INR 22,919 crore including administrative expenses. It pays three kinds of incentive. A turnover-linked incentive is a share of net incremental sales over a base year, at 1 to 10 per cent depending on the product. A capex incentive is 25 per cent of eligible capital expenditure. A hybrid incentive combines the two for two selected bare components.

Every rate is conditional. One percentage point of the turnover rate, or five points of the capex rate, is released only if an employment threshold is met, and the guidelines cap the total incentive at 50 per cent of eligible investment. The incentive runs over six consecutive years, and minimum thresholds for cumulative investment, sales and employment are set by the scheme for each product.

Who it binds

An applicant is a company registered under the Companies Act, 2013 or a limited liability partnership registered under the Limited Liability Partnership Act, 2008, investing in the manufacture of the target goods in India. One application is filed for each target product, and a revision means withdrawing and filing afresh, with the withdrawn fee forfeited. For three segments, eligibility turns on size, taken from the applicant together with its group companies and joint ventures, where a group company is one in which the applicant holds 26 per cent or more of the votes or appoints over half the board. For the supply chain and capital goods segment, the test is financial.

What has changed, and when

The scheme is the Gazette notification of 8 April 2025. MeitY issued guidelines on 26 April 2025, and under paragraph 1.2 of the guidelines the scheme prevails over them. Four later documents change the picture.

• An addendum of 7 July 2025 added segment E, the small form-factor pluggable optical transceiver, with its own rates and thresholds.
• A second paper of 7 July 2025 has MeitY pay the applicant directly, not through the project management agency that appraises applications.
• An amendment of 30 July 2025 extended the application window.
• A clarification of 29 September 2026 confines segment D magnets to those outside the Ministry of Heavy Industries scheme notified on 15 December 2025.

The portal states that the window for segments A, B, C and E closed on 30 September 2025 and that the window for segment D remains open until 30 April 2027.

What turns on it in practice

The scheme is mainly a question of reading its conditions carefully before money is committed. Eligible investment covers plant, machinery, tools, utilities and in-house research and development, with packaging, freight, insurance and erection capped at 7.5 per cent of base cost. Land, buildings, consumables, raw material, technology transfer fees and royalty are not incentivised. Contract manufacturing does not qualify, and job work may not be a significant part of the process. Investment or sales that are incentivised under another government scheme are excluded, which matters for a group that holds several incentives at once.

The employment condition is easy to miss. Employment is average monthly headcount over twelve months, direct or contractual, taken from Employees' Provident Fund Organisation records, with apprentices and casual labour excluded. A plant that meets its investment and sales thresholds but not its employment threshold is paid at a reduced rate, and a plant that does not meet the mandatory thresholds is not paid at all.

The scheme also carries recovery terms, so incentive paid on one set of facts can be sought back if the facts change. For a manufacturer, investor or lender, the advisory points are the choice of applicant entity, the treatment of group companies, the order in which incentives are claimed, and the covenants a lender or investor asks for in the project documents. The scheme is dealt with in the site's note on its incentive rates, thresholds and recovery terms, which sets these out in detail.