The Union government’s National Electronics Policy aims to boost the electronics manufacturing sector. The Indian states now need to implement the policy at the earliest
By Srabani Sen
Wednesday, January 09, 2013: The Government of India has created the overall framework to boost manufacturing of electronics hardware in India by introducing the National Electronics Policy. The states now need to play a huge role in implementing the policy at the state level, which means the Union government has to work closely with the state governments. Some states like Andhra Pradesh, Karnataka, Madhya Pradesh and Uttar Pradesh have been quick to come out with their policies. Many other states are still drafting policies. These policies now need to be marketed aggressively, domestically and globally. Let’s take a look at some of the states’ electronics hardware policies.
Madhya Pradesh
Madhya Pradesh announced an investment policy in September 2012 that aims to develop the electronics hardware and IT/ITES sectors in the state. Electronics hardware manufacturing in the state will qualify for all benefits that are currently available to the IT industry.
Some of the incentives available to electronics system design and manufacturing units in the state will include a single window project clearance and facilitation mechanism. Relevant incentives provided under the Madhya Pradesh Industrial Promotion Policy will be applicable to the IT industries established on government allotted land as well as on private land, with a provision of single window processing/clearances for all government formalities. Exemptions in the existing FAR for IT investment areas will be considered on a case-to-case basis, subject to the relevant provisions of the respective city development plans. A minimum 60 per cent of the total area allocated for IT investments will be used for IT operations, and the balance 40 per cent will be for the use of ancillaries and support services. No prior permission will be required for the installation of captive power plants. Rebates in the cost of land are included as one of the major incentives for attracting investments into the state. Various incentives related to statutory regulations under the relevant acts, covering income tax and working hours, will be applicable to the units.
Electronics hardware manufacturing units will be exempted from the payment of entry tax for a period of five years. Even existing IT units that plan to expand their capacities or modernise, can avail all the above benefits on their incremental production as ‘new IT units’, subject to certification by a designated agency. In order to qualify for this incentive the additional capital investment in expansion should be a minimum of 50 per cent of the existing capital investment (subject to a minimum amount of Rs 2.5 million).
Andhra Pradesh
Andhra Pradesh unveiled its electronics hardware policy in June 2012, which offers a slew of incentives, including 100 per cent reimbursement of the value added tax (VAT) and the goods and services tax (GST) for a period of five years, to those who set up units in the state.
The state government has also exempted the electronics hardware industry from any power cuts and statutory inspections, except in the case of a specific complaint. The policy also proposes to create four clusters in and around Hyderabad, which will include common testing and incubation facilities; a common fund under public-private participation to promote design, manufacturing, assembly and innovation; a single window system for necessary clearances, etc.
About 170 non-semiconductor items will be covered under the policy, besides a whole range of semiconductor manufacturing and testing equipment and parts used in making semiconductor equipment.
Incentives such as 100 per cent reimbursement of stamp duty, transfer duty and registration fee paid on sale/lease deeds, power subsidies ranging from 10 per cent to 50 per cent (limited to Rs 3 million for a period of five years), are among some of the discounts offered to companies.
Uttar Pradesh
The Uttar Pradesh government recently approved its IT Policy 2012, to boost IT, IT enabled services (ITES) and the electronics industry in the state. With the approval of this policy, an IT city in Lucknow will see the light of day. The state government will transfer 150 acres of Gajaria farmland on the Lucknow-Sultanpur road for the IT city.
The new policy lays emphasis on skill development, and on increasing the employability of engineers and others in the state. The policy also includes plans to develop another IT city in Agra. The Cabinet has cleared proposals to offer a 5 per cent interest subsidy to all new IT/IT-related industries that come up in the state. Also, to lure more industries to invest in UP, the policy offers land at a price that is 25 per cent lower than market rates and grants special permission (from the department of labour) to run IT businesses seven days a week.
Karnataka
Karnataka’s Electronics Hardware Policy was unveiled in June 2011 with an aim to promote smaller towns and compete with other southern states such as Tamil Nadu, which has attracted companies like Nokia, Samsung and others to set up manufacturing units in the state. An amount of Rs 250 million has been allocated under this scheme to fund projects related to boosting electronics manufacturing in the state.
The policy offers a number of incentives like exemption from stamp duty, investment subsidies, concessional registration charges, exemption from entry tax, subsidy for setting up effluent treatment plants, incentive for export-oriented enterprises, etc.
The Karnataka Electronics Hardware Policy has identified three corridors for setting up of electronics hardware manufacturing hubs and has assigned different types of hardware to each corridor. The Bangalore-Tumkur corridor concentrates on semiconductors, the Hubli-Dharwad corridor focuses on automotive electronics, and the Mysore-Nanjangud corridor caters to medical electronics.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine
