Centre plans investment subsidy for electronics

The government has proposed to give a Rs 1 lakh crore investment subsidy to the country's electronics industry over a period of next 10 years, with an aim to give a boost to the sector, a key official said today.

The push is expected to generate investment to the tune of Rs 4 lakh crore in the sector and create 20 million jobs in this decade, Joint Secretary in the Department of Information Technology Ajay Kumar said here.

Addressing a strategic electronics summit 2011, focused on defence and aerospace, organised by the Electronic Industries Association of India (ELCINA) here, he said the government has also proposed a seed and venture capital fund with a size of Rs 10,000 crore to Rs 20,000 crore to support start-ups and new ideas in the electronics sector. 

Noting that a special incentive package for the electronics industry expired last year, Kumar said a modified one in its place is "coming". Under the proposed new package, incentives would be made available to units across the value chain.

In the old package, it was available only for chips and high-tech components but in the new one, incentives would be available from raw materials to final product and accessories irrespective of the extent of value addition done, he said. 

Kumar also said the threshold limit for eligibility for subsidies would be brought down to Rs one crore from the earlier Rs 1,000 crore so that micro, small and medium enterprises (MSMEs) would also get incentives, which was not the case earlier.

Kumar said a set of units would be allowed to come together and create world-class electronics manufacturing clusters in different parts of the country with power, water, sewerage as well as common and testing facilities for those operating there.

The government has proposed to give around Rs 50 crore to such an industrial cluster located in 100 acres, Kumar said but was quick to add that this figure could vary depending on the facilities set up.

He said the vision is to make India an attractive global destination for electronic manufacturing. "In the Department of IT we are in the process of doing several initiatives which will make it more attractive for units to come into this business," Kumar said.

The government is in advanced stage of considering preferential market access for domestic production, he said. Under this scheme, 30% of all government and government-controlled procurement such as by PSUs and projects taken up on public-private-partnership model, would be
domestically manufactured goods.

Noting that currently government's research and development funds are headed towards institutions and labs in the public sector, with very little flowing to the private one, Kumar said there is a proposal to create a mechanism by which such funds are also provided to private industries on a
shared-basis to pursue commercially-relevant products and technologies.