core sector communique

Electronics Manufacturing Clusters Scheme to provide world-class infrastructure for attracting investments in the Electronics Systems Design and Manufacturing Sector

The Union Cabinet today approved the proposal to offer financial support for the development of Electronics Manufacturing Clusters (EMCs) as these EMCs would aid the growth of the Electronics Systems Design and Manufacturing (ESDM) sector, help development of entrepreneurial ecosystem, drive innovation and catalyze the economic growth of the region by increasing employment opportunities and tax revenues. The proposed EMCs scheme would support setting up of both Greenfield and Brownfield EMCs. The main features of the proposed EMC Scheme are as follows: (i) The assistance would be provided to a Special Purpose Vehicle (SPV) which should be a legal entity duly registered for this purpose. The SPV may be promoted by private companies, industry associations, financial institutions, R&D institutions, State or Local governments or their agencies and units within the EMC. The SPV should consider including an academic/research institution to be part of the proposed SPV for suitable academic-industry linkages. (ii) The financial assistance to the SPV shall be in the form of grant-in-aid only. For Greenfield EMCs the assistance will be restricted to 50% of the project cost subject to a ceiling of Rs. 50 crore for every 100 acres of land. For Brownfield EMCs the assistance will be restricted to 75% of the project cost subject to a ceiling of Rs. 50 crore. (iii) The scheme will be open for applications for five years from the date of notification. (iv) This is a policy decision with no automatic financial commitment. The financial assistance under the policy would be subject to approval by the Competent Authority following due process. The proposed scheme is expected to help flow of investment for the development of world-class infrastructure specifically targeted towards attracting investment in the ESDM sector. Nearly 28 million persons are expected to be employed, directly or indirectly for the ESDM turnover to reach USD 400 billion. The policy covers all States and districts and provides them an opportunity to attract investments in electronics manufacturing. Background: As part of the vision to make India a leading destination for the ESDM sector, the draft National Policy on Electronics (NPE) proposes to achieve a domestic production of about USD 400 Billion by 2020 in the ESDM sector by creating an industry friendly policy framework and ecosystem which provides a level playing field for the domestic industry. The draft NPE also proposes to set up two semiconductor wafer manufacturing facilities and to create and sustain a vibrant research and development and innovation eco-system in the ESDM sector. Setting up of EMCs is an integral part of this strategy. The importance of clusters in ESDM is a well accepted phenomenon worldwide. A well developed cluster can give a unit located in it a cost advantage of 5 to 8% because of various reasons such as increased supply chain responsiveness, consolidation of suppliers, decreased time-to-market, superior access to talent and lower logistics costs. The cluster development approach also helps in the development of entrepreneurial ecosystems which drive innovation and catalyze the economic growth of a region by increasing employment opportunities and tax revenues.