Uttar Pradesh unveils its new Electronics Manufacturing Policy

The mission of the policy is to make Uttar Pradesh the preferred place for electronics manufacturing companies in the country.

During the last couple of decades, the rise in disposable incomes in India have led to increase in demand across all sectors.

The demand for high technology products, specifically electronic products has registered a significant growth. According to the Task Force Report*, the demand for electronics hardware in the country will go up to USD 400 billion by year 2020. In 2009, the demand was for only USD 45 billion.

The production of electronics hardware is expected to reach USD 104 billion by year 2020. Thus if the current state of affairs prevails, then by 2020 there will be a gap of USD 296 billion between demand and supply of electronics products in India.

This rise in demand for electronic products presents an unique opportunity for companies in the ESDM (Electronic System Design & Manufacturing) sector to drive their business by setting up their manufacturing centres in the country. These manufacturing centres will not only cater to the domestic demand, but also produce products for export to other markets of the world.

Uttar Pradesh has now taken a bold step for encouraging electronics manufacturing in the state. On August 23, 2014, the Uttar Pradesh government unveiled the new UP Electronics Manufacturing Policy 2014. The policy is will enable many large, medium scale and small companies to set up their manufacturing centres in the state for mass producing electronic products like mobile telephones, TV, DVD, computers, etc. This will also lead to generation of thousands of new jobs for the youth of the state.

Vision & Mission
The UP Electronics Manufacturing Policy 2014 seeks to establish a conducive business environment for electronics manufacturing industry and its allied business partners, so that a large number of small and medium scale enterprises can come up in the state.

The vision of the UP Electronics Manufacturing Policy 2014 is “to promote and develop the Electronics Manufacturing Industry within Uttar Pradesh, thereby making Uttar Pradesh a globally competitive and industry friendly electronics design and manufacturing destination contributing towards the overall economy of the state and the nation.”

The mission of the policy is to make Uttar Pradesh the preferred place for electronics manufacturing companies in the country. The idea is to provide a sustainable environment for ESDM companies to set up their manufacturing centres. Well trained human resource is of importance to the electronics industry, hence the policy lays down special emphasis on providing the right kind of training to the state’s youth.

A Policy Implementation Unit (PIU) has been created to act as a Single Window Clearance unit, which will work closely with the investors and assist them in processing the various incentive related claims laid down under the policy.

Establishment of three clusters
The UP Electronics Manufacturing Policy 2014 has been created with the aim of establishing Electronic Manufacturing Clusters (EMCs) in the state. In these clusters large number of electronics companies can operate. In the initial phase of development, the government of Uttar Pradesh is planning to establish and promote small electronic manufacturing clusters. One of these would be set up in Greater Noida, while the process of identifying other two cities is underway. The clusters would be set up in 100 acres of land and ideally be close to markets for better sale.

Incentives
The first three electronic manufacturing companies to set up their manufacturing centres in the state are eligible for the following benefits:

Fiscal incentives

Capital subsidy
A Capital Subsidy of 15% on fixed capital other than land subject to maximum of INR 50 million. This Subsidy shall be provided to first 10 companies on the basis of their date of commencement of commercial operation.

Interest subsidy
5% interest subsidy for 7 years on the rate of interest paid on the loans obtained from Scheduled Banks/ Financial Institutions shall be reimbursed subject to a maximum of INR 1 crore per annum per unit.

Stamp Duty
100% exemption on stamp duty.

Incentives for filing patents
Reimbursement of actual filing costs subject to a maximum of INR 100,000 for domestic and INR 500,000 for international patents applicable for MSME units.

VAT/CST Reimbursement
100% tax reimbursement on VAT/CST for 10 years.

Other incentives & benefits

Provision of Land
Rebate of 25% on the prevailing sector rates on purchase of land shall be provided either to EMC SPV or the companies within the EMC on purchase of land from state agencies.

EMC Infrastructure Development
The policy targets the establishment of 3 Electronic Manufacturing clusters, for the development of the infrastructure facilities for these EMCs, the state government shall provide a subsidy equivalent to 50% of the grant provided by the Central Government under National Policy on Electronics, 2012.

Case to case basis
The policy shall consider special incentive package for the units investing more than INR 200 crores in this sector. Such incentive package of case to case basis also includes the FAB units establishing in Uttar Pradesh

Subsidy for Industrial Promotion
Industrial Promotion subsidy equivalent to 50% of the incentives applicable for new units (setting up in EMC) would be provided to existing units, if additional capital investment for capacity enhancement to the extent of 25% or more on the existing capacities of ESDM units is made in a period of 3 years
l Provision of Incentives to the e-waste recycle companies which are going to be established in the EMCs.
A special focus shall be on the skill development for the youth of the state so as to fulfill the industry appetite within the state.
Development of 2 Acres area as Incubator Centre (warm shell) in each EMC to promote startup/Entrepreneurs/R&D to be operated on PPP mode
Establishment of Mini Tool Room (MTR) within the area of 2-3 Acres in each EMC under PPP model which may be extended for Allied products
Permission will be provided to have 24X7 operations and employment of women in all three shifts.

‘Protective Load Status’
EMCs shall be provided ‘Protective Load Status’ by the state government for “Uninterrupted Power Supply”

“One Hand – One EMC” concept
The EMCs shall be hand-held under the “One Hand – One EMC” concept. For this, A Mission directorate shall be set up under IT & E department for the successful establishment of EMC and Electronic Manufacturing industry in the state.

Jiwesh Nandan is Principal Secretary, Information Technology & Electronics, Mining & Additional Sources of Energy, Government of Uttar Pradesh
*Source: Department of Electronics & Information Technology