Strive to ensure better results from ECMS
The Union Government’s warning to companies over the Electronics Component Manufacturing Scheme (ECMS) has come not a moment too soon. The approved projects must set up and incorporate in-house design capabilities in India, Electronics & Information Technology Minister Ashwini Vaishnaw has observed. In addition to the earlier approvals of 46 applications for Rs 54,567 crore, his Ministry has approved 29 more proposals under ECMS with projected investment of Rs 7,104 crore and projected production of Rs 84,515 crore. These approvals are expected to generate 14,246 direct employment opportunities. But the Minister is “not very happy with the progress.”
His exasperation is understandable as the government is “not getting support from industry. He wants the industry “to do more.” Vaishnaw looks forward to the industry redeeming its pledge to start a collective effort toward in-house design, but there has been no progress in this direction. He has beseeched the electronics component-manufacturing industry to develop structured programmes to achieve ‘Six Sigma’ manufacturing quality, which can be scaled up across all companies, especially among micro, small, and medium enterprises (MSMEs) approved under the scheme. According to Investopedia, Six Sigma is a set of techniques and tools used to improve business processes.
It was introduced in 1986 by engineer Bill Smith while working at Motorola. Six Sigma practitioners use statistics, financial analysis, and project management to identify and reduce defects and errors, minimise variation, and increase quality and efficiency. It is perhaps the first time in recent memory that an economic minister has so clearly voiced frustration and irritation with the response of India Inc. Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman, and other senior government functionaries have harangued the domestic industry to invest more, especially against the backdrop of huge infrastructure funding and a spate of reformist measures.
But the government must also try to find out the cause of apathy of investors. Understanding this is essential, because without diagnosing the root causes, policy interventions risk missing their mark. One factor is global competitiveness. Electronics manufacturing operates within deeply integrated global value chains dominated by countries like China, South Korea, and Taiwan. These ecosystems benefit from decades of investment, established supplier networks, and economies of scale that are difficult to replicate quickly.
Regulatory and structural challenges also play a role. While India has made significant strides in improving its business environment, issues such as land acquisition, compliance burdens, logistics inefficiencies, and policy unpredictability still persist in certain areas. Access to technology and talent is another critical constraint. Developing in-house design capabilities is not merely a matter of allocating funds—it requires a robust ecosystem of engineers, designers, research institutions, and industry-academia collaboration. Risk aversion within Indian industry is also worth examining.
Historically, many firms have preferred low-risk, asset-light business models, focusing on trading, assembly, or services rather than on deep manufacturing. Furthermore, the structure of incentives themselves may need closer scrutiny. While schemes like ECMS offer financial support, companies often evaluate the total ecosystem—policy stability, infrastructure reliability, supply chain depth, and export facilitation—before committing resources. If any of these elements are perceived as weak or uncertain, incentives alone may be inadequate to attract investment. In short, bridging the gap between policy intent and industry response requires a more nuanced approach, continuous interaction with all stakeholders, and immense patience. The onus is on all stakeholders.
