Uttar Pradesh aims to facilitate, promote and develop the electronic system design and manufacturing (ESDM) sector in the state, making it a preferred destination for investment in this sector. In a conversation with Sudeshna Das, senior executive editor, Electronics Bazaar, G.S. Naveen Kumar, special secretary to the chief minister, government of Uttar Pradesh, shared the state’s vision of developing the electronics industry into an important growth engine.
EB: What is your vision for the ESDM industry in the state?
Electronic system design and manufacturing (ESDM) is one of the fastest growing sectors in India. This sector is expected to grow to US$ 400 billion by the year 2020.
My vision is to promote and develop the electronics manufacturing industry within Uttar Pradesh (UP) and take it to the level where this state is treated as a globally competitive and industry-friendly electronic design and manufacturing destination, thus contributing towards the overall economy of the state and the nation.
UP plans to establish three electronics manufacturing clusters (EMCs). Investments to the tune of US$ 1 billion could be realised in the state, in the ESDM sector, within 2-3 years. The goal is to scale up EMCs and establish UP as one of the most preferred destinations for ESDM companies.
EB: What are the unique strengths of the state with respect to attracting investors in the ESDM sector?
Uttar Pradesh has emerged as a key hub for IT and ITeS industries, including software, captive business process outsourcing (BPO) and electronics. The state has become a hub for the semiconductor industry also, with several major players having their offices and R&D centres in Noida and Greater Noida. The existing ESDM players, like Samsung, LG Electronics, ST Microelectronics, logistics players and component suppliers, will help those ready to invest complete their value chain for the product. The state, therefore, will leverage its complementary strengths to attain the vision spelled out in the UP Electronics Manufacturing Policy 2014.
The state’s population is 230 million, which itself is a unique strength in terms of consumers available within UP. The state government aims to make the Greater Noida and Yamuna Expressway region the hub of ESDM in India. Proximity to Delhi gives a strong advantage to this region with the airport offering ready connectivity to the investors. The region has state-of-art infrastructure like sprawling residential campuses, the Formula-1 circuit, golf courses, the Yamuna Expressway extending to Lucknow, Metro connectivity, etc. The state and the region also shares a major portion of the EDFC (Eastern Dedicated Freight Corridor) and DMIC (Delhi-Mumbai Industrial Corridor), which will accelerate the growth of infrastructure across Uttar Pradesh. The state has good connectivity through 48 national highways, six airports internationally connected to Middle Eastern countries and the largest rail network spanning around 8,800 km.
Uttar Pradesh has a large skilled labour base, making it an ideal destination for knowledge-based sectors. The state also has a large pool of semi-skilled and unskilled labour.
Uttar Pradesh has a high number of academic and research centres including some of the nation’s premier institutions like IITs, IIM, NIT and IIIT. A good number of state and central government universities have also been founded in UP to provide higher education in different branches of electronics. Besides, a range of government as well as private degree colleges have been set up to provide higher education to scholars who are interested in different course works and programmes.
The state offers a wide range of subsidies and fiscal incentives, as well as assistance for businesses under the well-drafted, sector-specific policies for electronics, in the Uttar Pradesh Electronics Manufacturing Policy 2014 (UPEMP 2014).
EB: What are the initiatives taken by the UP government to further develop it as the manufacturing hub for this sector?
Uttar Pradesh has always been recognised as the manufacturing hub of India, and after setting up the cities of Noida and Greater Noida, UP became one of the preferred destinations for the world’s leading electronics as well as IT sector companies for setting up their design, development, research and manufacturing facilities. The state has realised this success due to the continuous industry-friendly initiatives taken by the state government, as well as the availability of excess, inexpensive and disciplined manpower of all types, be it skilled, semi-skilled or unskilled. Other factors like the state’s proximity to the National Capital Region, excellent connectivity to all parts of the country, very good infrastructure, the availability of all kinds of recreational facilities, an abundance of natural resources, the availability of institutional finance options, a large number of bank branches and the huge local market, have all contributed to this success.
Noida has already become the IT hub of India. To convert this IT hub into a manufacturing hub, the state came out with a unique policy offering a gamut of incentives to investors. This policy set up the right platform to attract investors to take advantage of the incentives promised under it. The first success was when Lava International Ltd established its base in the state with an investment of ₹ 26.15 billion, setting up a facility on 10.11 hectares of land.
With the vision to further develop UP as an ESDM manufacturing hub, the state government is setting up three Electronics Manufacturing Clusters (EMCs) in the Yamuna Expressway region (40.5 hectares and 42.5 hectares, respectively) and in Greater Noida (85 hectares). The state is also offering a number of fiscal incentives like a capital subsidy, interest subsidy, VAT/CST reimbursement, exemption of stamp duty, provision of land, patent and certification fee reimbursement, an industrial promotion subsidy for existing plants/units in the state, etc, under the UPEMP 2014 to attract the maximum investments.
The state government has also initiated large scale skills development, infrastructure development and the setting up of R&D facilities and incubators. It is also partnering with national and international institutions and corporates. The UP government is also focusing on the development of world class infrastructure.
EB: How does the state government plan to achieve the goals set out in the UP ESDM Policy? What is the roll-out status for these plans?
As I just mentioned, UP has one of the most sought after electronics manufacturing policies in the country, which offers the complete range of fiscal incentives to investors. The state government categorises investments in two broad categories—investments up to ₹ 2 billion and those over ₹ 2 billion. The first category has well defined fiscal incentives, which are clearly mentioned in the state’s electronics manufacturing policy. The second category is treated as mega investments, and incentives for this category are special/tailor-made, requiring the approval of an empowered committee of the state government.
As per the existing electronics manufacturing policy, for investments up to ₹ 2 billion, the state government will give a 15 per cent capital subsidy, a 5 per cent interest subsidy, 100 per cent VAT/CST reimbursement, 100 per cent stamp duty exemption, a 25 per cent rebate on land prices and reimbursement of patent filing costs. Also, 50 per cent of the subsidy applicable to new units will be given to existing units if they expand their facilities within the state.
The state is focusing on the planned EMCs, and is approaching investors from other countries as well as the leading associations of those countries. We have signed an MoU with the Taiwan Electrical & Electronics Manufacturing Association (TEEMA) to facilitate the TEMC (Taiwan Electronics Manufacturing Cluster) in Greater Noida on 65.78 hectares of land.
EB: What are the steps taken by the UP government to ensure ease of doing business in the ESDM sector?
UP is among the top 10 states in the rankings for ‘ease of doing business’. The Department of Information Technology & Electronics has a single-window clearance mechanism to provide all statutory clearances for new investments coming into the state. A special cell, called the Policy Implementation Unit (PIU) and consisting of professionals, has been set up by the department to act as a single point of contact for all queries related to investment facilitation. This is backed by a dedicated team of officials for administration and management purposes.
EB: What is the current investment status in the ESDM sector of the state and what is the projection for the next financial year?
UP hosts manufacturing facilities of some of the leaders in the electronics sector, i.e., ST Microelectronics, Samsung India, LG Electronics India, HCL Infosystems, Xerox India, Spice, Lava, Intex, Vivo Mobiles, etc. The state has received proposals from leading mobile manufacturers and their component suppliers, both domestic as well as international players from Taiwan, China, South Korea, etc. Making a conservative estimate, the state will witness investments of over ₹ 10 billion in the next financial year.
EB: Tell us more about the different thrust areas mentioned in the recent UP state ESDM policy?
The UPEMP 2014 is getting a very good response in almost all the areas mentioned in the policy. We have received a very good response in mobile device manufacturing, consumer electronics manufacturing, industrial electronics manufacturing and telecommunication products manufacturing.
The state has some unique strengths, which provide a platform for high-end technology manufacturing. For example, UP is one of the front-running states when it comes to providing the requirements of fab units —adequate supply of water, power, land, etc. The state is in discussions with investors on proposals for high-end technology product manufacturing.
EB: What are the UP government’s plans to ensure the proper policy administration for promoting electronics and IT in the state?
UP is the first state that is in the process of establishing dedicated ‘mission directorate’ for the UPEMP 2014, which will work closely with the investors in setting up their base in the state and providing the incentives promised to them. The mission directorate dedicated for the ESDM sector will act as a one-stop solution for all the investor queries. These will not only facilitate single-window clearances, but also handhold the investors right from the stage where they are a prospect, to the time they run successful operations in the state.
The Policy Implementation Unit (PIU) comprising professional consultants will work under the mission directorate. Therefore, an internal robust system has been created to address the investors’ concerns and queries.
Along with this, the state government will also organise national and international conferences, summits, road shows and events with the help of industry associations and corporates. Print, electronic and social media is being used to create awareness, branding and positioning of UP as one of the preferred states for electronics manufacturing. The state government also participates in various conferences, summits, events across the globe to promote UP’s policies.
EB: How will the state foster entrepreneurship and an innovation culture in the ESDM sector through startups?
The UP government has a dedicated startup policy, with a vision to create a world class startup ecosystem in the state through strategic investments and policy intervention, leveraging the robust innovation climate in the state. The implementation strategies include nurturing innovation in educational institutes, encouraging commercialisation of technologies through technology-business collaboration, providing incubation support to budding entrepreneurs, and facilitating startups with mentorship and other business services. In order to ensure access to capital through the entire life cycle of a startup, funding schemes are being put in place, starting from the idea stage to PoC (proof-of-concept) funds, and on to venture funding through the Uttar Pradesh Fund of Funds. We know that it is these startups that have the most potential in generating jobs for the youth, while creating cutting-edge technology products within the country.
EB: What are the initiatives taken by the UP government to promote skills development and enhancement in the ESDM sector with a special focus on MSMEs?
The Uttar Pradesh Skill Development Mission (UPSDM) was formed in 2011 to carry forward the skills development initiatives in the state. UPEMP 2014 is aligned with the UP Skill Development Mission to ensure the required skill sets for the electronics industry, as well as pass on the benefits of the scheme to the eligible.
The government has been committed to building new technical and management institutes in the state in order to bridge the skills’ demand-supply gap. In the electronics sector, MoUs have been signed with the National Institute of Electronics & Information Technology (NIELIT), the Electronics Sector Skill Council (ESSC) and the Telecom Sector Skill Council (TSSC) to train 15,000 students for employment in the industries to be established in the Electronics Manufacturing Clusters (EMCs).
Also, we are in the process of obtaining customised curriculum from the investors and aligning these courses with UPSDM, so that specific skills training can be imparted to the youth of Uttar Pradesh and they can be employable as soon as they complete this training. We are in the process of doing the same with Lava International Ltd, which is the anchor unit of one of the EMCs at the Yamuna Expressway region.
EB: What are the innovative marketing plans and platforms offered by the UP government to boost the ESDM sector in the state?
We are coming out with a website dedicated to the UP EM Policy, which will not only provide the latest updates along with incentives, but will also enable investors to reach out to the government with just a single click. As mentioned earlier, UP has set up a dedicated team called the PIU, comprising professionals and backed by department officials to help in facilitating and promoting the ESDM sector in the state, by organising as well as participating in events held at the national and international levels. The department is also planning to organise its own flagship event in the coming months, which will give an opportunity to those from the industry, academia and entrepreneurs to network on a single platform. The department closely works with industry associations like IESA, ELCINA, NASSCOM, ASSOCHAM, CII, FICCI, MAIT, etc.
EB: What are the outreach activities taken up by the state to ensure effective communication with the ESDM ecosystem partners, including industry and academia?
The state government participates in reputed national and international events to reach out to the potential investors. In October, last year, the state government participated in TAITRONICS at Taipei, Taiwan, and showcased the benefits of the state and its policy by outlining the various incentives. The state also organises flagship events like eUttarPradesh, for which we invite all industry players, entrepreneurs and industry associations.
EB: What is your message to the ESDM ecosystem partners?
We are committed to make Uttar Pradesh the most preferred destination for the ESDM industry. We are also committed to providing an investor-friendly business environment, which is marked by speedy decision making. We will ensure that doing business in Uttar Pradesh is a rewarding experience. I believe this is just a beginning, and we will very soon harness the full potential of the ESDM sector.
