The full form of M-SIPS is Modified Special Incentive...

� The full form of M-SIPS is Modified SpecialIncentive Package Scheme notified underNotification No. 17/2012 Dated 25/07/2012.

� The eligibility & entitlement for this schemementioned in the above notification

� The amount of incentive indicated inAnnexure-4 of this Notfn.

� The list of items covered in this schemeindicated in Annexure – 5 of this Notfn.

Ace Valuation Services L.L.P Ace Consulting Engineers 1

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h1 hp, 14-09-2014

The Cabinet approved the Modified Special IncentivePackage scheme (M-SIPS) in July 2012, the Departmentof Electronics and Information Technology (DeitY) hascome up with detailed guidelines on this scheme. Underthe M-SIPS scheme the government will provide up toRs 10,000 crores in benefits to the industry over thenext five years for promoting production of electronicsproducts and components in India.

All the relevant Notifications can be accessed thru :-http://www.msips.in/MSIPS/ImportantLinks.do


� An existing scheme was modified and renamed as M-SIPSbecause the government found that the current scenario inthe country has many hindrances like high cost of powerand finance, high transactional costs, poor base of supplychain, etc, which hampered manufacturing of electronicscomponents and products.

The scheme, therefore, aims to boost domestic and globalinvestments in the electronics manufacturing sector; cutdown transaction costs and remove other obstacles thatare being faced by the manufacturing sector; boostmanufacture of semiconductors, components andelectronic products; reduce dependency on imports toprocure semiconductors wafers, components, equipment,etc. M-SIPS with incentives of Rs 100 billion have thepotential to create employment for nearly 0.5 millionpeople. .


� Government has included 29 categories in ElectronicSystem Design and Manufacturing (ESDM) sector thatcan avail benefit of this MSIPS. This includes telecom, IThardware, consumer electronics, medical electronics,solar photo-voltaic, LEDs, LCDs, strategic electronics,avionics, industrial electronics, Nano- electronics,semiconductor chips, other electronic components,contract manufacturing.

The scheme has included units starting from rawmaterials assembly, testing, packaging and accessorieswhich will boost ecosystem for electronicsmanufacturing in the country and reduce dependenceon imports. To woo foreign investors, MSIPS will alsoprovide incentives for relocation of units from abroad.


� Benefits under M-SIPS can be obtained if investments are made in new unitsin the electronics system design and manufacturing sector (ESDM) orexpansion of capacity, modernisation and diversification are done toexisting units

� To qualify as an expansion of capacity, modernisation and diversification ofan existing unit, there must be an increase in the value of fixed capitalinvestments in plant and machinery by not less than 25 per cent.

�

New units have to be set up within the electronics manufacturing clusters tobe notified by DeitY

� New or existing units should be engaged in design and manufacturing ofelectronics and Nano-electronics products and their accessories

� Even electronics manufacturing services (EMS) companies, which providesservices related to manufacture of sub-assemblies and parts includingintegration services to OEMs, can obtain incentives under M-SIPS

� The scheme also provides incentives for relocation of units from abroad


� Capital expenditure: M-SIPS provides subsidy for investments incapital expenditure 20 per cent for investments in SEZs and 25 percent in non-SEZs

� Capital expenditure for the purpose of this scheme will be treated astotal of capital expenditure in land (subject to a maximum of 2 percent of total capital expenditure), building, plant and machinery andtechnology including research and development

� Incentives against the capital expenditure shall be released after theend of financial year in which total investments exceeds thethreshold value. Thereafter, incentives shall be provided on anannual basis on the value of investments made during the year

� Reimbursement of Central taxes and duties: M-SIPS also provides forre-imbursement of counter veiling duty (CVD)/excise for capitalequipment for non-SEZ units. For high technology and high capitalinvestment units, like fabs, re-imbursement of central taxes andduties is also provided

� Continued….Ace Valuation Services L.L.P Ace Consulting Engineers 6

� Investment thresholds applicable for units are different depending upon thetype and nature of products as defined in the scheme. These investmentthresholds vary from Rs 10 million to Rs 54 billion depending on variousproduct types, in the areas of setting up of fabs, assembly, testing, markingand packaging (ATMP) activities and manufacturing activities

� The limit for setting up an ATMP facility has been revised to Rs 10 million asagainst the previous limit of Rs10,000 million. According to the proposal,minimum investment for manufacturing items like mobile accessories is Rs10 million. For memory fabrication units, the upper limit is Rs 500 billion)

� Reimbursement of central taxes and duties actually paid will be releasedafter the end of the financial year in which the unit commences production.Thereafter, incentives will be provided on an annual basis on the value oftaxes/ duties actually paid during the year

Approvals for incentives not exceeding Rs 100 billion will be granted duringthe XII Plan period. It gives companies an option to declare financial closureof projects in stages and avail subsidies accordingly. This will helpcompanies to set up units


Type of unitType of unitType of unitType of unit Incentive in SEZIncentive in SEZIncentive in SEZIncentive in SEZIncentive in nonIncentive in nonIncentive in nonIncentive in non----

SEZSEZSEZSEZ

New unit in ESDM

Sector

20% of capital

expenditure

25% of capital

expenditure

Existing unit in ESDM

sector expanding its

capacity/ modernisation

and diversification

20% of additional fixed

capital investment in

plant and machinery

25% of additional fixed

capital investment in

plant and machinery


� The incentives are available for 29 category of ESDMproducts including telecom, IT hardware, consumerelectronics, medical electronics, automotiveelectronics, solar photovoltaic, LEDs, LCDs, strategicelectronics, avionics, industrial electronics, Nano-electronics, semiconductor chips and chipcomponents, other electronic components andelectronic manufacturing services (EMS). Units acrossthe value chain starting from raw materials includingassembly, testing, packaging and accessories ofthese category of products are included as per thelist of products mentioned in Annexure 5 ofNotification 17/2012 Dated 25/07/2012.


� Incentives are available for investments made in aproject within a period of 10 years from the date ofapproval. The scheme is open for three years fromnotification . SinceSinceSinceSince thethethethe notificationnotificationnotificationnotification waswaswaswaspublishedpublishedpublishedpublished onononon JulyJulyJulyJuly 27272727,,,, 2012201220122012,,,, thethethethe initialinitialinitialinitial applicationapplicationapplicationapplicationinininin thethethethe schemeschemeschemescheme willwillwillwill bebebebe receivedreceivedreceivedreceived uptouptouptoupto JulyJulyJulyJuly 26262626,,,,2015201520152015....ApplicationsApplicationsApplicationsApplications shouldshouldshouldshould bebebebe filedfiledfiledfiled withwithwithwith thethethethe MMMM----SIPSSIPSSIPSSIPSappraisalappraisalappraisalappraisal committeecommitteecommitteecommittee


� An M-SIPS appraisal committee will be set up by DeitY toconsider the applications under the scheme, and submit itsrecommendations to the government. On the basis of suchrecommendations, approval will be granted to theapplications by the Central government

� One or more technical evaluation committee s (TECs) will alsobe set up, which will provide recommendation regarding thetechnology proposed by an applicant and whether the saidtechnology is 'state-of-the-art' or not. A TEC will comprise of6-8 members including 3-4 academicians, 2-3 industryrepresentatives and 1-2 representatives from DeitY.

� A program management unit (PMU) will also be set up toassist in processing and appraising the initial and follow upapplications received under the scheme


� An initial application, complete in all respects, will be made by an applicant, for anapproval of a project under the scheme. A project proposed in an initialapplication will be for investment in manufacture of products . If the initialapplication is made by a consortium, each member of the consortium should signthe application. Investments by entities other than applicants will not beconsidered for the purpose of assessing the eligible incentives under the scheme.

If a project is proposed to be implemented in phases, the complete project wouldbe considered for approval and only that phase of the project for which financialclosure is furnished will be considered for implementation and incentives. Theincentives under the scheme, at any point of time, will be limited to the phase ofthe project which is approved for implementation.

The applicant has to make a non-refundable initial application fee, which has tobe paid in the form of a crossed demand draft made in favour of Deity. In additionto the application fee, the applicant will also have to pay an appraisal fee if Deitychooses to get the project appraised through a third party.


� Government has taken some corrective measures and havecome up with this ambitious scheme. Now, it is for theelectronics industry to act fast and derive maximumbenefits from this scheme.

The taxation benefits under this scheme can act as an eyeopening announcement by the government to the globalcompanies to set up more R&D and manufacturing centresin India.

This scheme is no doubt a sincere effort from thegovernment, and all stakeholders of the electronicsecosystem should make give a deep thought to M-SIPS. Itis expected that by the next decade, electronicscompanies will substantially increase their engineering,production, and assembly footprints in India in order to belocally relevant and to compete and grow.


� M-SIPS is proposed to be extended to units involved in the manufacture of the following product types:

Electronic products including Nano-electronic and telecom products (as per list provided)

� Intermediates, which include: � Nano Electric components � Semiconductor wafering � Semiconductor chips � Chip components, discrete semiconductors and power semiconductors � Solar photovoltaic � Light emitting diodes (LED) � Liquid crystal displays (LCD) � passive components, electro-mechanical components, mechanical parts and

consumables and accessories � Electronic Manufacturing Services (EMS) � Any Intermediate item required for the above products� For a detailed list of products, investment thresholds and incentives provided

against the same, please follow Notification 17/2012 dated 25/07/2012.


List of Verticals under which Applications can be Submitted

� Electronic Products� Telecom Products� Nano Electronics Products� IT Hardware� Consumer Electronics� Health and Medical Electronics� Strategic Electronics� Solar Photovoltaic including thin film, polysilicon etc� Light Emitting Diodes(LED)� Liquid Crystal Displays(LCDs)� Avionics� Industrial Electronics Products� e-waste processing/recycling� Automotive Electronics� Agri-Electronics� Energy Conservation Electronics� Opto-Electronics� Bio-metric and identity devices/RFID� Power Supplies for ESDM products continued….continued….continued….continued….


Intermediates:

� Nano Electronics Components

� Semi-conductor wafering

� Semiconductor Chips including logic, memory and analogy

� All Assembly, Testing, Marking and Packaging of ESDM Units

� Chip Components

� Discrete Semiconductors like Transistors, Diodes

� Power Semiconductors( including diffusion) like FETs,MOSFETS,

� SCRs, GTDs, IGBT etc.

� Electromechanical Components and Mechanical Parts as Multilayer

� PCBs, Transformers, Coils, Connectors, Switches, Ferrites, Micro Motors,

� Stepper Motors, Films etc.

� Consumables and Accessories such as Mobile Phones and IT accessories –

� Batteries, Chargers etc., PCBs, Foils, Tapes, Epoxy, Cabinets etc.

� All Fabrication Manufacturing facilities (Fabs) for ESDM products

� Electronic Manufacturing Services( EMS) as per Notfn 17/2012


Total project cost proposed & Total project cost proposed & Total project cost proposed & Total project cost proposed & submitted alongwithsubmitted alongwithsubmitted alongwithsubmitted alongwith the initial the initial the initial the initial application (INR)application (INR)application (INR)application (INR)

NonNonNonNon----refundable Initial application refundable Initial application refundable Initial application refundable Initial application fee (INR)fee (INR)fee (INR)fee (INR)

>= 1000 crores 1,00,000/-

>= 100 crores & <=1000 Crores 50,000/-

>= 10 crores & <= 100 Crores 25,000/-

>= 10 crores 10,000/-

Cost of subsequent phase(s) of the Cost of subsequent phase(s) of the Cost of subsequent phase(s) of the Cost of subsequent phase(s) of the approved project alongwith followapproved project alongwith followapproved project alongwith followapproved project alongwith follow----ups Application (INR)ups Application (INR)ups Application (INR)ups Application (INR)

NonNonNonNon----refundable Followrefundable Followrefundable Followrefundable Follow----up up up up application fee (INR)application fee (INR)application fee (INR)application fee (INR)

>= 1000 crores 1,00,000/-

>= 100 crores & <=1000 Crores 50,000/-

>= 10 crores & <= 100 Crores 25,000/-

>= 10 crores 10,000/-

Note: The Fee should be in form of Crossed DemandNote: The Fee should be in form of Crossed DemandNote: The Fee should be in form of Crossed DemandNote: The Fee should be in form of Crossed Demand Draft in favor of “ Pay & Accounts Officer, Draft in favor of “ Pay & Accounts Officer, Draft in favor of “ Pay & Accounts Officer, Draft in favor of “ Pay & Accounts Officer, Department of Electronics and Information Technology, New Delhi” payable at New Delhi from Department of Electronics and Information Technology, New Delhi” payable at New Delhi from Department of Electronics and Information Technology, New Delhi” payable at New Delhi from Department of Electronics and Information Technology, New Delhi” payable at New Delhi from Commercial Bank.Commercial Bank.Commercial Bank.Commercial Bank.


S.No.S.No.S.No.S.No. StateStateStateState BrownfieldBrownfieldBrownfieldBrownfield Electronics Manufacturing Cluster Electronics Manufacturing Cluster Electronics Manufacturing Cluster Electronics Manufacturing Cluster for Mfor Mfor Mfor M----SIPSSIPSSIPSSIPS

ClusterClusterClusterCluster----IDIDIDID

Reference Reference Reference Reference Notfn DateNotfn DateNotfn DateNotfn Date

1Andhra Pradesh

Districts of Hyderabad, Ranga Reddy & MedakAP-1

26th June, 2013

2 Distt of Nellore & Chitoor AP-2

3 Distt Vishakhapatnam AP-3

4 District Krishna AP-4

5 Haryana Distt: Gurgaon HR-1 23rd Dec, 2013

6 Tehsil, Bawal HR-2

7 Sub Tehsil – DharuheraHR-1 HR-3

8 Himachal Pradesh

Block Kandaghat HP-1

9 Block & Urban Body Area, Solan HP-2

10 Block- Dharampur HP-3

11 Block – Nalagarh HP-4

12 Urban Body Area – Nalagarh HP-5

13 Urban Body Area – Baddi HP-6





14 Himachal Pradesh

Urban body area ParwanooHP-7

23rd Dec, 2013

15

KarnatakaDistt of Bengaluru, Bengaluru Rural & Tumkur KK-1 21st

March,201316 Mysore, District KK-2

17Kerala

Distt : Thiruvananthapuram KL-1 23rd Dec, 201318 Distt: Alappuzha KL-2

19

Maharashtra

Distt: Pune MH-123rd Dec, 2013

20 Mumbai (including Mumbai city, district and Mumbai Suburban District)

MH-219th Feb, 2014

21Navi Mumbai (including Navi Mumbai Municipal Limits Area)

MH-319th Feb, 2014





22

Madhya Pradesh

District of Dewas, Indore & Dhar MP-121stMarch,

201323 District – Bhopal MP-2

24

District - Raisen MP-319th Feb, 2014

25Puducherry Union Territory of Puducherry PD-1

13th May, 2013

26Punjab

Mohali-Greater Mohali Development Authority Areas

PB-113thMay, 2013

27Rajasthan District Jaipur RJ-1

23rd Dec, 2013

28Tamil Nadu District Kancheepuram TN-1

26th June,2013

29Uttar Pradesh

Noida- Greater Noida Development Authority Areas

UP-121stMarch,

2013


S.NoS.NoS.NoS.No....

StateStateStateState BrownfieldBrownfieldBrownfieldBrownfield Electronics Electronics Electronics Electronics Manufacturing Cluster for MManufacturing Cluster for MManufacturing Cluster for MManufacturing Cluster for M----SIPSSIPSSIPSSIPS

ClusteClusteClusteClusterrrr----IDIDIDID

Reference Reference Reference Reference Notfn Notfn Notfn Notfn DateDateDateDate

30 WestBengal

District – Kolkata WB-1

13th May,2013

31 Haldia Development Authority Area WB-2

32 Kharagpur, (Kharagpur area falls under Midnapur Kharagpur Development Authority

WB-3

33 Durgapur (Durgapur area falls under Asansol Durgapur Development Area)

WB-4

34 Siliguri (Siliguri area falls under Siliguri- Jalpaiguri Development Area)

WB-5

35 District Howrah WB-6

26th June 2013


Scope of the work will be as per Client requirement and readiness, as below:-

� Due Diligence of the application for correctness and alignment with DeitY guidelines◦ Check if all individual/ promoter/consortium information is provided as per guidelines◦ Check if all individual documentation is part of the application◦ Check if all company documentation is part of the application◦ Check if all reports related documentation is part of the application◦ Check if the report contains all the information as asked for◦ If any of the above is missing, send the list of missing◦ information/documentation to the client & advise on what is required◦ Final check once all information/documentation/reports and content is submitted by client

�

� Preparation of the application where business plan is completed by the client Collection of required data and business plan from the client◦ Primary & Secondary research◦ Preparation of the report◦ Incorporation of changes if any◦ Preparation of the final document

�

� Preparation of the business plan and the application; Preparation of the business plan which includes :◦ Current Status of the business including financials

◦ Detailed project report which includes the following reports◦ Technology Proposal◦ Technology and Market feasibility if any available◦ Operations and facilities Analysis◦ Financial Modelling including sensitivity analysis◦ Risk and Sustainability Plan


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