Financial support for developing electronics sector approved

The Union cabinet has approved a proposal to offer financial assistance for the development of Electronics manufacturing Clusters (EMCs), to aid the growth of the Electronics Systems Design and Manufacturing (ESDM) sector in India.

Setting up clusters brings about cost advantage of upto 8 per cent to an ESDM unit through supplier consolidation and lower logistics cost. The proposed EMS scheme would support establishment of both green-field and brown-field EMCs. “Under the scheme, financial support would be provided to a Special Purpose vehicle (SPV) registered for this purpose. The assistance would be restricted to 50 per cent of the project cost for green-field EMCs and 75 per cent of the project cost for brown-field EMCs,” an official statement read.

The scheme would be open for applications for five years. The government clarified that today’s announcement is merely a policy decision and should not be seen as a financial commitment as the financial assistance under the policy would be subject to approval of a competent authority.

The scheme is expected to help flow of investment for development of in the ESDM sector. India’s draft National Policy on Electronics (NPE) proposes to achieve domestic production of around $ 400 billion by 2020 in the ESDM sector by creating an industry friendly policy framework.