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BW Businessworld

India Wants Big Byte Of E-Pie

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Under the proposed National Policy on Electronics (NPE), the Cabinet recently approved two schemes — Electronics Manufacturing Clusters (EMCs) and Modified Special Incentive Package (M-SIPS). An Electronics Development Fund is also on the cards. Says J. Satyanarayana, secretary, Department of Electronics and Information Technology (DeitY): "The policy is expected to create an eco-system for indigenous manufacture of electronics products in the country."

Promoting electronics manufacture is critical as demand for electronic products is expected to hit $400 billion by 2020 from the current $60 billion. Currently, India imports 80 per cent of its electronics product needs, which is dutyfree as per WTO guidelines. If domestic manufacture of electronics products does not take off, electronics imports could rival oil imports by 2020.

Under the M-SIPs and EMC programmes, the government will provide up to Rs 10,000 crore as incentives. Satyanarayana expects 200 EMCs to be up and running in the next five years. Each cluster would need at least seven units in a contiguous area. It will provide financial support of up to Rs 50 crore for setting up a cluster that houses the eco-system for manufacturing specific devices. Under the M-SIPs programme, the government has set subsidy thresholds: 20 per cent to special economic zones (SEZs) and 25 per cent to non-SEZs. Under this, the minimum investment required for semiconductor manufacture is Rs 1,000 crore, for memory chips Rs 400 crore and for LCDs Rs 250 crore.

To meet the trained manpower requirements, DeitY along with the Centre for Development of Advanced Computing and the National Institute of Electronics and Information Technology will initially train 14,000 people in electronic hardware over the next three years in Aurangabad, Chennai and Hyderabad, says Satyanarayana. DeitY will also work with the National Skill Development Corporation to train people for the IT hardware and electronics industry.

One of the problems of manufacturing in India is the price disadvantage it faces compared to China and Taiwan. "We need to offset a good part of that disability without violating WTO guidelines," says Satyanarayana. Currently, it has sought help from the telecommunications and commerce ministries to identify products that India should focus on immediately.

The guidelines for the schemes under the NPE are likely to be announced in August. DeitY will be conducting road shows and seminars across the world to promote the schemes.  Communications and IT minister Kapil Sibal will lead a delegation to Germany in early September.

It remains to be seen to what extent these initiatives will reduce India's electronic imports.

(This story was published in Businessworld Issue Dated 30-07-2012)