The most promising state policies for the Indian ESDM Sector

Here’s an analytical and comparative study of the leading state policies for the ESDM sector in India

The electronics industry worldwide has been on a growth trajectory. Globally, the size of this industry, as recorded in the latter half of 2014, was US$ 1.75 trillion and this is expected to reach US$ 2.4 trillion by 2020. In India, numerous policy related initiatives have been taken up by the government, and the country is expected to become one of the significant contributors to this industry.

The launch of the National Policy on Electronics
Currently, the Indian electronics market stands at about US$ 70 billion. However, it is expected to touch US$ 400 billion by 2020. The absence of a solid manufacturing base and value adding capabilities within the country, led to worries that the demand supply gap in India was likely to reach US$ 300 billion by 2020. Hence, the Department of Electronics and Information Technology (DeitY), government of India, announced the National Policy on Electronics 2012 (NPE 2012). The policy was proposed to address this challenge, and to enhance domestic manufacturing and value addition in the Indian electronic system design and manufacturing (ESDM) sector.
The basic aim of the NPE 2012 was to attract investments of about US$ 100 billion, thereby employing 28 million Indians in the industry, by 2020. A lot of state governments have taken this policy seriously and are making conscious efforts to implement it, at the regional levels. Apart from that, the states have also come up with their own policies, which expand the scope of the NPE, adding value to it. Besides, the launch of the ‘Make in India’ campaign has been acting as a major inspiration for the states and the electronics manufacturing companies alike.

Disclaimer: State policies taken into consideration in this story include only those that have been launched in or after 2012, till July 31, 2015

Chhattisgarh

The ‘Electronics, IT and ITES Investment Policy of Chhattisgarh 2015-2020’ aims to make the state an all-rounder in electronics. The aim is to build a more informed society, resulting in active and responsible citizens. The state government is looking to create an environment wherein every facet of life in Chhattisgarh is touched by electronics. The policy aims to promote SMEs, which can put technology to good use in order to become global leaders. The state also plans to establish Naya Raipur as the first smart city in the country.

Highlights of the policy

• Electronics manufacturing units operating within Chhattisgarh will be eligible to get a reimbursement of 75 per cent of the total interest paid annually, up to a period of eight years. The maximum limit of reimbursement will be ₹ 11 million per annum
• Fifty per cent of the fixed capital investment, excluding the cost of land, will be reimbursed to units established in the state with a maximum limit of ₹ 15 million
• Eighty per cent of the land premium will be reimbursed to manufacturing units established within the notified IT areas of the state
• Allotment of the land within the notified IT area will depend on the project’s cost. A maximum of 80,937.13sqm of land will be allotted to a unit with a project cost of ₹ 500 million to ₹ 1 billion
• All units established within the state of Chhattisgarh will be entitled to a 100 per cent exemption on electricity duty for a period of 12 years from the date of the project’s commencement
• Hundred per cent exemption will be given on CST and Entry Tax for a period of 10 years from the time of commencing operations or until GST is applied in the state
• One per cent of the fixed capital investment, with a maximum limit of  ₹ 400,000, will be reimbursed to the units to prepare a project report
• Units operating in rented or leased properties will be entitled to a reimbursement of 50 per cent of the amount paid towards the rental charges for the initial three years, with a maximum limit of  ₹ 1 million per annum
• Recruitment and training assistance will be given to the units established in the state at the rate of  ₹ 20,000 per professional recruited in the first three years, with a limit of ₹ 1 million in a year
• All MSMEs within the state shall be eligible for a reimbursement of 30 per cent of the charges paid towards the use of Internet bandwidth, for a period of three years, with the maximum limit of  ₹ 300,000 per annum
• Units with a minimum of 50 per cent of its workforce being domiciles of Chhattisgarh will be eligible to get an additional incentive of 5 per cent over and above other incentives
• Units with investments of more than  ₹ 1 billion will be eligible to get additional incentives over and above the already existing ones, as decided by the empowered committee
• Industries which start their operations in the FY 2015-2016 with a minimum workforce of 500 employees, will be eligible to get special incentives including bonus points in technical evaluation limited to 5 per cent of the maximum score in IT related tenders of the state government and free advertising space wherever possible in government sponsored events for industries
• Electronics, IT and ITES units in the state will be permitted to generate self-certified reports on returns and on the units’ compliance with various acts or standards

Analysis
What is impressive about the Chhattisgarh policy is its completeness. The policy is for electronics, IT and ITES—which covers a broad scope. Its benefits will affect three vast sectors that are futuristic in nature. The entire electronics industry, right from manufacturers of components and makers of finished consumer products to every stakeholder in the complete value chain, will benefit from the policy.
The state is at an advantageous position due to ready availability of basic resources including an abundance of available land, high water availability due to a high rainfall and a low pressure of population on natural resources. Land in the state is competitively priced. Besides, the state offers greater return on investments (RoI) due to the low cost of operational overheads in the emerging cities of Chhattisgarh. In addition, Chhattisgarh is known to have some of the most skilled young workers, thanks to the state government’s keen attention given to education with 24 universities, 450 colleges (50 for engineering), six medical colleges, 25 polytechnics and 118 ITIs.

What sets the state apart
Chhattisgarh’s strength lies in having a policy that benefits the widest range of stakeholders in the electronics manufacturing ecosystem in some way or the other. Besides, the state also has some natural advantages that sets it apart from the rest, such as:

• Highest amount of natural resources available such as abundant land, water and power
• The government’s intention of providing SMEs with a global stage
• The target of setting up India’s first smart city
• The state’s policy supports taking most of the services and procedures to the online platform
• The state’s policy offers the highest interest subsidy
• The policy has the most detailed and well-structured classification of land available at concessional rates as per the project’s cost, with seven slabs
• A subsidy on the project report is one of the USPs of the policy
• Financial assistance towards bandwidth charges is another USP of the policy

Gujarat

The government of Gujarat has a holistic approach towards making the state one of the leading electronics manufacturing hubs in India. One of the main objectives of the state’s policy, titled Electronics Policy for the State of Gujarat (2014-19), is to make Gujarat an ESDM hub with a turnover of US$ 16 billion by 2020, and to drive investments of US$ 6 billion so that 500,000 people are employed in the industry by 2020. In addition, the exports from the ESDM sector are targeted to reach US$ 1 billion by 2020.

Highlights of the policy

• The policy proactively supports all eligible units to avail the benefits of the NPE 2012, which includes MSIPS, EMC cluster schemes, skills development and the PhD scheme, among others
• In addition to the benefits offered by the EMC scheme, the state government will provide up to 25 per
  cent assistance to greenfield EMCs, with a ceiling of  ₹ 100 million
• Uninterrupted power supply and tariff subsidy at ₹ 1 per unit on the billed amount for a period of five years
• Net tax paid under Section 13 of the Gujarat Value Added Tax Act by the eligible units will be reimbursed by the state government, with the amount limited to 90 per cent of the gross fixed capital investment made by the unit within one year (two years in case of ‘Mega ESDM Projects’)
• Single Window Clearance Committee will be introduced for speedy and hassle-free approvals and clearances for the setting up of new units in the state
• The state government will give assistance to 10 MSMEs to acquire the appropriate technology by providing a grant of 50 per cent (with a limit of ₹  10 million per technology) including royalty payments for the first two years
• Interest subsidy of 7 per cent to be given to MSMEs for a period of five years, while large industries with an actual investment of up to ₹ 1 billion will be entitled to an interest subsidy of 2 per cent
• Assistance will be given to MSMEs for participating in international trade fairs by providing 50 per cent of the expenditure required for rent or organiser fees, product catalogues and display material, with a limit of  ₹ 200,000
• Semiconductor fabrication will be given special attention as it has already been notified as a focus sector under the ‘Scheme for Assistance to Mega/Innovative Projects’
• The state government will organise a mega electronics event in partnership with the ESDM industry

Analysis
The policy reflects the Gujarat government’s conscious efforts towards making the state self-sufficient in most aspects of the electronics manufacturing sector. Right from providing support to avail the NPE’s benefits, helping a unit at every micro level and looking into the financial benefits, it is hard to find any lacuna in this policy.

• Attention has been paid to the various minute details that will be instrumental in making the state achieve its goals. Through this policy, the state government is not only paying attention to the development of each electronics manufacturing unit, it is also focusing on things that help a unit operate at its full potential. One of these factors is providing the appropriate education, training and skills development to people who work or will work in these units in the future. The state government is driving this initiative through various public-private partnerships. In a way, the state government is ensuring a solid foundation for the all-round development of the ESDM sector in Gujarat.
• Another interesting focus area is the support provided to R&D institutions. The state government is ready to provide all kinds of need-based support to these institutions. In addition, the state government will also support the development of testing facilities and incubation centres. The financial assistance provided will cover up to 60 per cent of the project cost, excluding land and buildings, subject to a maximum of ₹ 5 million.
• Besides these initiatives, the state’s policy incentives also include schemes which will provide support to every aspect of manufacturing including the employee provident fund (EPF), quality certification, patent filing assistance and the development of mega ESDM projects, among others. If implemented properly, Gujarat could become a global electronics hub of far greater importance than currently envisaged.

What sets it apart

• Gujarat’s electronics policy boasts of being one of the most comprehensive in the ESDM sector in India. Some of its unique points are listed below:
• One of the strongest schemes for assisting training institutions and skills development for the ESDM industry
• A special focus on quality certification—the policy offers an incentive of 50 per cent of the quality certification costs, with an overall ceiling of ₹ 600,000 over five years
• The policy provides detailed guidelines on incentives for VAT/CST with a scope for modifications in the future.

Madhya Pradesh

Madhya Pradesh has chosen a unique path to make the state self-sufficient in electronics manufacturing. The state’s latest policy is called the Analogue Semiconductor Fabrication (fab) Investment Policy 2015.

Highlights of the policy

• Any analogue semiconductor wafer fabrication facility that is backed by an investment of ₹ 30 billion qualifies as a fab unit that can avail the incentives, subsidies, concessions and all other benefits under this policy
• Land area, measuring up to 30,3514.23sqm, will be provided free of cost (on a 50-year renewable basis) to the fab unit, based on actual requirements
• While electricity will be provided from two grids as per the fab unit’s requirements, the state government will also reimburse the amount paid by the unit towards electricity charges over and above 7.5 US cents per kWh up to a period of 10 years from the commencement of production
• Uninterrupted water supply will be provided to the fab units. The state government will reimburse the amount paid for the service, with a limit of US$ 0.50 per cubic metre, over a period of 10 years from the start of production
• The state government will reimburse the amount spent by a fab unit in internal training and expatriate mentoring with a cap of up to US$ 10 million or the actual expenditure, whichever is less, after deducting any other government subsidy availed by the unit. This facility will be available for a period of five years from the start of production
• All units that play a vital role in the operation of a fab unit (an ultra pure gas plant, for instance) will be entitled to all the benefits under the policy
• The total value of incentives given to any fab unit will not exceed 15 per cent of the total capital investment in the unit. The exempted stamp duty and cost of land provided free of cost will not be a part of the 15 per cent limit
• The incentives granted by the state government under the IT Investment Policy 2012 will not come under the 15 per cent limit.

Analysis
A quick glance at the policy gives an impression that the state government has a single-minded focus on semiconductor fabrication. Actually, the policy supports the entire electronics manufacturing ecosystem. For instance, the policy intends to provide essential benefits to every unit that participates in meeting the needs of a fab unit’s operations. Besides, marrying the IT Investment Policy 2012 with this new policy will help Madhya Pradesh become one of the electronics manufacturing hubs in India and hence create a considerable number of job opportunities in the state.
Apart from the focus on fabs, the state government is providing enough support to the sector in every possible manner. Construction of better roads for better transportation of raw materials, facilitating a free trade zone at the airport, providing financial assistance to construct these fab units and a number of other efforts are some of the many ways in which the state government is providing its support towards the cause.

What sets it apart
The biggest USP of Madhya Pradesh’s policy is its focus on the development of fab units. While other states also have support for fabs as a part of their policies, the following points place Madhya Pradesh slightly ahead in comparison:

• By setting the benchmark of a ₹ 30 billion investment to qualify as a fab unit, Madhya Pradesh has paid the maximum attention to the sector as compared to the other Indian states
• The highest amount of land is being provided for each fab units, measuring up to 303,514.23sqm
• The policy has one of the best schemes for water and power, particularly for the fab units

Uttar Pradesh

The Uttar Pradesh Electronics Manufacturing Policy 2014 has a simple approach to promoting the electronics manufacturing industry. While its vision is similar to other states in making UP a leading electronics hub, it intends to focus on its skilled human resources and put them to good use. While the development of EMCs and fab units are some of the main focus areas, there are other notable aspects of the state’s electronics policy as well.

Highlights of the policy

• The first 10 companies that commence operations within the EMCs of the state will be eligible to get a capital subsidy of 15 per cent on fixed capital other than land, subject to a maximum of  ₹ 50 million
• A subsidy of 5 per cent per annum will be provided for a period of seven years to companies paying interest on the loans taken from scheduled banks and financial institutions. The maximum limit of the amount paid to each unit will be ₹ 10 million
• Hundred per cent reimbursement will be given on VAT/CST for a period of 10 years, with a maximum limit of 100 per cent of fixed capital investment other than land
• A rebate of 25 per cent on the prevailing rates will be provided to companies buying land within the EMC
• The state government will support all units in EMC infrastructure development (roads, power, testing facilities, social infrastructure, etc) by providing a subsidy which is equivalent to 50 per cent of the grant provided by the central government under the NPE
• When existing ESDM units make an additional capital investment for capacity enhancement to the extent of 25 per cent or more on the existing capacities, in a period of three years, they will be entitled to the Industrial Promotion subsidy that is equivalent to 50 per cent of the incentives applicable for the first 10 units setting up new manufacturing units within the EMC
• Special attention and incentives will be given by the empowered committee to MSMEs investing in the range of  ₹ 10 million to ₹ 2 billion
• Electronics manufacturing units that invest more than ₹ 2 billion in their operations will be eligible for special incentives over and above the existing ones, the extent of which will be decided by the empowered committee. These incentives will essentially be on land and power expenses
• 8093.71sqm of land will be developed by the state government in each EMC as incubation centres to promote start-ups/entrepreneurs/R&D units—to be operated on a PPP model
• The electronics manufacturing units will be given the permission to operate 24×7 and employ women in all three shifts
• A memorandum of understanding (MoU) signed between Uttar Pradesh Power Corporation Ltd (UPPCL) and an EMC’s special purpose vehicle (SPV) will ensure good quality uninterrupted power supply to all electronics manufacturing units
• The Policy Implementation Unit (PIU) will formulate marketing and branding strategies for all electronics manufacturing units

Analysis
Uttar Pradesh’s policy for the ESDM industry has a simple yet futuristic and effective approach towards the all-round development of the state as an electronics manufacturing hub. As mentioned earlier, the state wants to make full use of the skilled human resources within its boundaries. The state claims to have the largest number of engineering graduates from the fields of IT, electronics and communication, with a bank of education institutions dedicated to the same field. In all, the state boasts of approximately 36 universities, 2104 colleges, 1500 ITIs, 197 B-schools and 320 engineering colleges, and has premier institutions such as IIT, IIM, IIIT and BHU.
The state policy targets the development of not only the electronics manufacturing units within the state, but also its allied partners whose contributions are crucial. Even though there is no specific incentive dedicated towards the purpose, the policy intends to have a special focus on the development of fab units. This is clear from how the sector enjoys the eligibility of numerous benefits that are attached to the manufacturing units. It suggests that other benefits may be offered to the sector by the empowered committee in the future. Besides, the EMCs will support all upcoming fabs in terms of upstream and downstream units in order to develop the entire value chain of the electronics manufacturing industry under the state policy’s umbrella.
Other common benefits that the state policy is providing include e-waste management, a single window clearance system and the UP Skill Development Mission, among others.

What sets it apart
Uttar Pradesh’s electronics policy has clear objectives set for almost every aspect it covers. The following factors differentiate it from the others:

• MoU between UPPCL and EMC SPV to ensure good quality uninterrupted power supply to all electronics manufacturing units
• Focus on allied partners who contribute to the electronics manufacturing ecosystem
• A better intent to make EMCs assist in the development of fab units
• More detailed focus on marketing and branding activities of the units by providing them support in multiple ways including media coverage for promotional purposes

E-waste handling is being given more attention in order to achieve an eco-friendly manufacturing environment.

Andhra Pradesh

Andhra Pradesh’s biggest strength has been its pool of talented professionals with entrepreneurial skills. Since these abilities are just perfect to develop an electronics manufacturing ecosystem, the state came up with its own electronics policy titled Andhra Pradesh Electronics Policy 2014-2020. The policy aims to attract investments of US$ 5 billion into the ESDM sector and generate employment opportunities for 0.4 million people by 2020.

Highlights of the policy

• The government of Andhra Pradesh is planning to promote the development of 20 electronics manufacturing clusters (EMCs) in different parts of the state and thereby help companies in getting the 50 per cent subsidy offered by the central government under the NPE 2012
• The state government is planning to make conscious efforts to achieve the target of attracting investments amounting to US$ 5 billion under the MSIPS scheme, which will enable the units to get a 25 per cent subsidy under the NPE
• Support will be provided to electronics manufacturing companies within the state in getting the benefits of the preferential market access (PMA) policy
• The state government has decided to develop Visakhapatnam into an Information Technology and Investment Region (ITIR) and eventually turn it into a mega electronics hub for Andhra Pradesh
• The state government will set up ‘Common Facilities Centres’ in all electronics hubs in order to ensure smooth operations on a daily basis
• Enough support will be provided by the state government for infrastructure development for EMCs within Andhra Pradesh
• Electronics manufacturing companies using renewable energy to meet at least 40 per cent of their power requirements will be eligible to get additional incentives from the state government, which includes electricity duty exemption for a period of five years. In addition, sales tax exemption for two more years would be available against carbon credits earned by the companies on a year-on-year basis
• The electronics industry in Andhra Pradesh will be exempted from inspections/certifications under the acts as administered by the Labour Department. Permissions will be given to run three shifts in a day including a night shift for women, provided necessary safety measures are taken
• The state government is planning to set up ‘Electronics Bazaars’ at Visakhapatnam, Vijaywada and Tirupati to act as a platform for new product launches and as a sales window across various mediums including G2B, B2B and B2C
• A single window system will be in place for speedy business approvals, resulting in ease of setting up electronics manufacturing units within the state
• There will be a special focus on skills development within the state. Among various benefits given by the state government, MSMEs with at least 20 employees on their rolls would be entitled to receive a reimbursement of 50 per cent of the training fees, subject to a maximum of ₹ 10,000 per employee per annum
• Help will be provided to the state’s education sector in preparing skilled human resources for the ESDM sector. Among other benefits, the state government will introduce a special scheme for faculty upgradation in educational institutions dedicated towards the purpose

Analysis
While there are certain benefits provided by the state government, a major chunk of the policy’s focus is on the proper implementation of the central government’s NPE. Most of the benefits that are credited to the state government are in a way extensions of the benefits provided by the NPE. But that does not diminish the scope of this policy in any manner since the state already has a lot of potential and active participation in the IT sector. The electronics and technology friendly ecosystem within the state has already been built up to a certain extent. Besides, the state government’s keenness in improving education to produce skilled manpower specifically for the sector can prove to be a great boon for the electronics manufacturing industry.

What sets it apart
Andhra Pradesh’s policy has its own strengths that can prove competitive. The following are a few unique benefits provided by the state’s electronics policy:

• In comparison to other states, the Andhra Pradesh government has a more clear idea of where exactly it wants to set up the EMCs within the state
• The presence of Common Facilities Centres
• Creating an eco-friendly manufacturing environment by encouraging the use of renewable energy to meet the companies’ power requirements
• Establishment of ‘Electronics Bazaars’ for creating a better business environment

Karnataka

The Karnataka Electronic System Design and Manufacturing (ESDM) Policy 2013 has been formulated with some clear targets. The state government wants to make Karnataka one of the leaders in the Indian ESDM sector by contributing at least 10 per cent of the US$ 400 billion target set by the NPE. In an attempt to achieve this, the state intends to account for more than 20 per cent of the country’s export targets in the ESDM sector (US$ 80 billion) by 2020 and thus create at least 240,000 job opportunities. It aims to have 25 per cent of India’s PhDs as well as 5000 patent filings in the ESDM sector by that year.

Highlights of the policy

• The state government will support Karnataka’s ESDM companies in getting the benefits of the central government’s PMA policy
• Three well-equipped ESDM innovation centres will be developed to provide complete infrastructural support to companies that want to take their product concept and implement a working prototype
• The state government will create a Semiconductor IP and Fabless Chip Design Fund to support Karnataka’s ESDM companies—for start up, growth and working capital needs until 2020
• The Karnataka government will help create seven EMCs, provide world class infrastructural support to them and hence attract more investments in the sector. This support provided by the state government will not exceed 20 per cent of the total infrastructure cost
• The state government will market Brand Karnataka to promote the state as an attractive ESDM centre for global investors
• The state government will encourage innovations in the ESDM sector through awards in the form of grants
• In order to make Karnataka a leader in building intellectual properties, the state government has a target for ESDM firms to file 3000 domestic and 2000 international patents by 2020. The state government will reimburse up to 50 per cent of the expenses incurred for this purpose, with a maximum of ₹ 100,000 for filing a domestic patent and ₹ 500,000 for filing an international patent
• To help increase the export of ESDM products, the Karnataka government will provide reimbursements of 50 per cent of the actual costs (including travel) incurred in international marketing, sales promotion, trade show participation, etc, subject to a maximum of ₹ 1 million per year, per company
• A capital subsidy of up to 10 per cent or ₹ 50 million, whichever is lower, will be provided by the state government to attract more investments in the ESDM sector. The first two anchor units in each greenfield cluster will be eligible to avail this benefit

Analysis
Karnataka is set to have a bright future in the ESDM sector. One of the main reasons for this is an already established ecosystem within the state that is dedicated for this sector. Professional skills, a knowledge base and managerial talent are already available in plenty in the fields of very large scale integration (VLSI), semiconductor chip design and embedded software. Records from 2012 reveal that the state already has 85 chip design houses, 336 R&D facilities and delivers outsourced IT solutions to over 400 of the global Fortune 500 companies. It has over 600,000 technology professionals employed in Bengaluru alone.

What sets it apart

Karnataka, as highlighted above, is a state that is ready to see more growth in the ESDM sector in the times to come. The following are a few differentiating factors in its policy:

• Karnataka already has a strong base with 85 chip design houses and 336 R&D facilities within the state
• Making the state exports-ready with a target of contributing at least 20 per cent of the all-India US$ 80 billion target set by NPE
• To generate 240,000 new job opportunities
• The target of 5000 patent filings in the ESDM sector by 2020
• A separate fund for semiconductor IP and fabless chip design

Kerala

Kerala has never had an electronics policy earlier. But the ‘Kerala Industrial & Commercial Policy Amended – 2015’ has enough elements that can benefit the ESDM sector. Whatever growth the state has seen till now has been on the basis of industrial policies introduced in 2001 and 2007. The latest policy has a part of it dedicated to the ESDM sector and intends to provide enough support to make this an integral part of the state’s economic growth.

Highlights of the policy

• The state’s policy intends to make Kerala a preferred destination for ESDM investments and enable it to become one of the leading contributors to the Indian electronics industry’s turnover by 2020
• Thiruvananthapuram, Alapuzzha and Kannur districts have been identified for brownfield EMCs under the MSIPS
• The Kerala government will provide a 20 per cent capital subsidy for new electronics manufacturing units established within the state
• The state government will defer VAT for ESDM companies with investments of ₹ 100 million for a period of five years
• The state government will set up a well-equipped electronics incubator in close proximity to a prominent R&D institution engaged in the electronics sector

Analysis
Kerala’s policy benefits for the ESDM sector look comparatively lean, at first glance. But the state’s involvement in this sector is not recent. That is one reason why the state can be counted on to make a strong impact in the sector. Besides, Kerala has the highest literacy rate in India and thus an abundance of skilled manpower ready to work in the industry. So the foundation is strong and we already know that Kerala is one of the leading IT/ITES destinations in India. In addition, the state policy is ready to provide enough support to the MSME sector, which can as a result attract more investors to start their electronics manufacturing units in the state.

What sets it apart
Kerala’s involvement in the field of electronics is not new. The following are a few features about its policy which differentiates it from other states:

• Highest literacy rate and an already e-ready environment gives Kerala an edge over the other states in terms of skilled human resources
• Deferment of VAT for a period of five years
• Proximity of incubators to the EMCs

West Bengal

West Bengal has not launched any policy for the electronics manufacturing sector recently, but the ‘West Bengal Policy on Information & Communication Technology, 2012’ promised a good number of things to the IT, ITES and ESDM sectors. With an aim to make the state’s share in the production of electronics goods in India 15 per cent by 2020, the state government intends to provide all kinds of support to the aforementioned sectors, right from providing educated and skilled human resources to facilitating quality assurance and effective e-waste management, among other things.

Highlights of the policy

• The state government, either through assistance from the central government or out of its own funding, will set up at least 15 EMCs for SME investors in cities like Kolkata, Falta, Asansol, Kharagpur, Purulia, Kalyani and Siliguri, along with three to four other cities, by 2017
• A dedicated hardware cell will be set up in the state government’s IT department for providing enough infrastructural support at reasonable costs to large investors to set up their manufacturing units
• The development of a design centre with assistance of one or more technological institutions located within the state
• Attempts will be made to promote the creation of intellectual property in the field of design, automation and embedded systems
• All necessary policy and promotional efforts will be carried out to attract investors to set up fab units in the state. The state government will also provide land and infrastructure related support to these units
• Effective action will be taken to attract FDIs from countries like Japan and Taiwan
• Potential investors will be serviced through a single window system and Web-based transactions will be enabled to the maximum extent
• Efforts will be made to develop IT hubs and/or incubation centres in Tier II and Tier III cities like Durgapur, Asansol, Kharagpur, Haldia, Barjora, etc
• The state government will set up a VC fund with a corpus of ₹ 100 million through a state government agency to promote R&D in the state, to encourage innovation and creativity among local entrepreneurs

Analysis
Though there is no doubt that the West Bengal government has paid special attention to the IT, ITES and ESDM sectors, the policy lacks the numbers with regard to the quantum of subsidies, incentives and firm promises that the other states are providing. In spite of this, there is a ray of hope for the state because of the availability of natural resources like land, water and power along with the increasing base of skilled manpower, which will be available in the future thanks to the conscious boost provided in the education sector.

What sets it apart
Even though there no firm commitments for the ESDM sector or its allied partners in West Bengal’s policy, here are a few things that set it apart from the rest:

• Special attention given to Tier II and Tier III cities of the state for sector-specific developments
• Seeking FDI in the sector from Japan and Taiwan, in particular
• A dedicated hardware cell to be set up in the state government’s IT department
• A design centre to be developed in assistance with one or more technological institutions in the state
• Setting up of private data centres to support innovation and R&D in the state

Telangana

Telangana does not have a policy dedicated to electronics manufacturing yet. But as a new state, which envisages becoming one of the most productive, it has an industrial policy which has earmarked electronics, IT hardware, cellular communications and fabs to be a part of the thrust sectors. The key focus areas include the IT software and hardware sectors, along with the central government’s approval for an IT investment region for Hyderabad as well as two EMCs. Besides, a large health industry in the state will provide support to the bio-medical devices industry and medical electronics. The industrial policy covers a large chunk of sectors but since electronics is one of the key focus areas, some of its objectives and incentives are expected to benefit electronics manufacturing and IT to a considerable extent.

Highlights of the policy

• An online helpdesk and grievance redressal system will be established to ensure ease of doing business in the state
• The Telangana State Industrial Project Approval and Self-certification System (TS-iPASS) will be strengthened by way of legislation and will provide a Right to Single Window Clearance to ensure no delays in setting up industries (and thereby eradicate the traditional single window system)
• Special focus will be given to SMEs and micro industries by way of special provisions to these sectors
• The state government will focus on promoting the entire value chain in each of the core sectors. One of the ways it plans to do so is by setting up supplier/vendor parks, since primary suppliers play an important part in the manufacturing ecosystem by providing the raw materials required for production
• The state government will create a corpus jointly with the industries and their associations to help SMEs from being declared ‘sick’. The Telangana government will also make revival plans for sick SMEs in close collaboration with the RBI constituted State Level Inter-Institutional Committee (SLIIC).
• Special assistance will be given to women entrepreneurs in the state with initiatives that include industrial parks exclusively for women, training women in partnership with organisations working for women and getting project proposals developed, among others
• About 8 billion square metres of land has been identified by the state government as unfit for cultivation and ready for industrialisation, along with a range of infrastructural support provided by the Telangana State Industrial Infrastructure Corporation (TSIIC)
• The state government will facilitate the setting up of 300MW-500MW private power plants for the industrial parks, with the wheeling and transmission of the power being facilitated by the Transmission Corporation of Telangana Limited (TSTRANSCO)
• Sector-specific skills development programmes will be designed by the state government in association with the industries to ensure trained candidates meet industry requirements

Analysis
Even though the policy benefits are not focused on the electronics manufacturing sector specifically, they are expected to be instrumental in supporting the sector in a great way. The vision for industrialisation of Telangana is, ‘Research to Innovation; Innovation to Industry; Industry to Prosperity’. This is sure to make a healthy impact on the electronics manufacturing industry, since it is driven by innovation and R&D to a great extent. While these policy benefits are expected to provide enough support to the electronics manufacturing sector in the future, the sector is also expected to give back to the state by contributing to its vision of creating employment opportunities for the youth and be instrumental in the development of the backward areas of the state.
Telangana, being the newest state in the country, would want to make its mark by marketing itself as a brand and will thus provide enough support to local industries to participate in various events and trade shows, both at the national and international levels. The ESDM sector can take full advantage of this. Besides, chances of a state-specific electronics policy cannot be ruled out in the future.

What sets it apart
As mentioned earlier, Telangana’s policy is not for the ESDM sector alone. It is an industrial policy that caters to many other sectors too. But since electronics is one of the thrust sectors in the policy, there are certain benefits that will place its electronics manufacturing ecosystem at a comparatively good position:

• An online helpdesk and grievance redressal system
• TS-iPASS will enable a one-of-a-kind Right to Single Window Clearance system
• A large health sector in the state will fuel the growth of bio-medical devices and the overall medical electronics sector
• Ancillary/vendor development schemes will smoothen the supply chain for the ESDM sector and benefit all stakeholders in the system
• A corpus to support sick SMEs

Special assistance to be given to women-run companies to encourage more women to enter the ESDM sector

By EB Bureaue