Electronics industry bats for govt support to small firms and startups

The electronics and component manufacturing industry is expecting a Rs 100 billion credit guarantee scheme in an upcoming policy to support startups and small firms in the sector. There is also a proposal seeking tax benefits for high net worth individuals to attract more investments in the segment.

“One of the proposals considered for the new policy is the credit guarantee scheme. The idea is to impose a cess on electronics to create a Rs 100 billion fund. This will be similar to the Electronics Development Fund,” said Vinod Sharma, managing director of Deki Electronics and former president of the Electronic Industries Association of India (Elcina), at an event organised by the association in Chennai.

The fund is expected to be accessible to those foraying into electronics hardware manufacturing. “We hope it sees the light of the day. It could also be a credit guarantee failure scheme for  banks that lend to the industry,” Sharma said. The government is expected to come out with a national policy on electronics soon.

Besides, Elcina had suggested to the government that high net individuals investing in start-ups in the electronics and component manufacturing industry be provided an income tax pass through. The organisation had received a positive response from the government on that, Sharma added.

Access to capital was one of the major challenges for small electronics manufacturing firms, said Amit Gupta, managing director of Sancraft Industries. “Even though there is technical knowhow and an aspiration to grow, access to capital is a big challenge faced by many micro and small scale industries in India. Information technology companies support startups in their segment. If some large companies can handhold the micro and small industry, it would be helpful,” he said. Sunil Vachani, chairman and managing director, Dixon Technologies, said some private equity money was coming into the industry now.

In a separate development, the ministry of electronics and information technology is planning to bring in a phased manufacturing programme for LED lights and set-top boxes after implementing a similar scheme for mobile phones. The ministry was targeting $500 million of mobile phone manufacturing by 2019-20 through the phased manufacturing programme, said SK Marwaha, director of the department of electronics and information technology.

India has 113 mobile-related component units and domestic value addition in feature phones and smart phones is expected to reach 37 per cent and 26 per cent, respectively, by 2019-20.