Q&A: Pradip K Dutta, Chairman, ISA

'EDF will jump-start growth in semiconductor SMEs'

The India Semiconductor Association (ISA) is hopeful that the new policy initiatives charted by the Central government will be approved by the end of this year. In an interview, ISA Chairman Pradip K Dutta, who is also the managing director of the India operations of US-based Synopsys, a provider of electronic design automation (EDA) software for semiconductor manufacturing, tells K Rajani Kanth that the National Electronics Mission (NEM) and the Electronics Development Fund (EDF) envisaged by the Centre will help start-ups and SMEs alike in vying for a bigger share of the industry pie. Edited excerpts:

What problems do semiconductor companies in the country face, especially start-ups and SMEs?
The industry is suffering from lack of seed capital. Venture capitalists do not like to support start-ups or SMEs and they always look for late-stage investments. Manufacture of hi-tech electronics is capital-intensive and for entrepreneurs, getting capital is the biggest issue. The EDF, with an over Rs 5,000-crore seed fund provided by the government itself, will jump-start growth in SMEs, besides helping in creation of new companies.

 

After the implementation of incentives and other policy frameworks, to what extent will the industry grow?
Under the ESDM study that we did in 2010, we estimated that electronics consumption in India would be about $400 billion by 2020, compared to the current $45 billion. For this, we need incentives from the government, to foster industries both in design and manufacturing. That’s the reason why the Centre has formulated the idea of establishing the NEM, which would be a nodal agency for the industry within the department of IT, for promoting existing clusters and creating new electronics clusters.

How are these new initiatives going to help local companies?
With EDF, the investment threshold will be lowered and access to investments will be much faster, which eventually will help SMEs. When electronics consumption reaches the $400-billion mark by 2020, 15-20 per cent of that will have semiconductor content ($50-60 billion). And once these policies are in place, much of it can be done locally. These policies will also give preferential access for domestic manufacturers, like a certain percentage of government or government-related procurement, if they can meet the costs and quality targets of global standards.

Are there any emerging segments that will propel growth for semiconductor SMEs?
The growing number of domestic mobile handset brands is one factor that holds promise. Some of the many domestic mobile manufacturers actually do not do any value-addition locally. They still import many of the parts and just do local assembly. So, we see that changing, going forward, with more semiconductor companies helping them do such value-addition.

When do you expect these policy initiatives to be in place?
All these require some kind of approvals, right from the ministerial level to Parliament. I don’t think all of these will be approved at the same time. But, I am hoping that everything will be approved by the end of this year.