Eyeing domestic manufacturing, Cabinet clears electronics policy

By : BS Reporter
Last Updated: Thu, Oct 25, 2012 20:40 hrs

To boost indigenous manufacturing of electronic goods, the Cabinet on Thursay cleared the National Policy on Electronics 2012, which would offer fiscal incentives for setting up electronic manufacturing clusters. The idea is to fill a gap between domestic demand and supply in electronics goods which is slated to rise to $300 billion by 2020 and lead to huge imports, higher than even petroleum products.

“The Union Cabinet approved the Policy. The draft National Policy on Electronics was released for public consultation and it has now been finalised based on comments from various stakeholders,” an official statement said.

Through the policy, the government targets to attract about $100 billion of investment in the electronic equipment manufacturing industry.

The policy would also give preferential market access to domestically manufactured electronic products and setting up of semiconductor wafer fabrication facilities. Based on the Cabinet approval, a high level empowered committee has been constituted to identify and shortlist technology and investors for setting up two semiconductor wafer manufacturing fabrication facilities.

The government expects that the new policy would generate fresh employment for about two million people. The government would also set up an Electronic Development Fund, the statement said.

The policy stated that indigenous availability of electronic components as raw material is estimated to increase to more than 60 per cent of the requirements by 2020 from 20-25 per cent at present.

Demand for electronics products has been rapidly growing in the country. However, the domestic production in 2008-09 was worth about $20 billion.

In the absence of a government initiative, it was estimated that at the current rate of growth, domestic production can cater to a demand of $100 billion by 2020 as against the total demand of $400 billion. The rest would have to be met by imports.

“This aggregates to a demand supply gap of nearly $300 billion by 2020. Unless the situation is corrected, it is likely that by 2020, electronics import may far exceed oil imports,” the statement said.

The policy emphasised on creating a globally competitive Electronic System Design and Manufacturing (ESDM) industry, besides building the chip designing and embedded software industry.

The government targets to increase exports of ESDM to $80 billion by 2020 from $5.5 billion at present.

The policy also said the government should give special focus on enhancing skilled manpower. It aims to have about 2,500 PhD holders on electronics and related subjects annually by 2020.

The government would also increase fund flow for research & development (R&D) seed capital and venture capital for start-ups in the ESDM and nano electronics sectors.

Based on another Cabinet approval, a policy for providing preference to domestically manufactured electronic goods has been announced.

To secure talent pool, the government would seek involvement of private sector universities and institutions for scaling up capacities. The policy also called for setting up a specialised Institute for semi-conductor chip design.

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