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India to expand electronics manufacturing base to $400-bn

Having established itself as the backroom office for global businesses with a flourishing outsourcing industry, India is taking steps to expand its electronics manufacturing base to avoid imports, arrest dollar outflows and add jobs, a top official has said.

"We are importing so much of electronics items that we are draining our foreign exchange," said J. Satyanarayana, secretary, Department of Electronics and Information Technology.

"So, manufacturing is of course the focus area for us in the latest National IT Policy (2012). We are looking at an electronics manufacturing industry the size of $400 billion by 2020, from $70 billion now," Satyanarayana told IANS in an interview.

"The policy has provisions for IT infrastructure as well."

The electronics industry has 27 verticals, including telecom, office automation, automotive, medical and avionics. The employment opportunity is immense in this sector because it is manpower-intensive, the secretary said.

"Just as IT parks created the boom initially for the software side, here we call it Electronics Manufacturing Clusters where we will give 50 percent subsidy on creation of such infrastructure."

The government last month said through the policy, it is creating an opportunity for companies in the electronic system design and manufacturing sector to look at India as their next destination to cater to the domestic demand as well as act as an exports hub.

The IT department has already received eight proposals across the country worth Rs.2,100 crore ($360 million) for infrastructure. It aims to do 200 EMCs across the country to achieve that target of $400 billion by 2020, the IT secretary said.

The government is asking promoters to put together a group of entrepreneurs who are interested in creating the manufacturing units, which has some kind of synergy to form a national cluster.

"It is not necessary that all the people who will set up units in the area will have similar businesses. But it is indicative that they will have synergies in terms of common test facility or something in common, which will help them become more cost effective," Satyanarayana said.

"For every 100 acres we will give Rs. 50 crore, or 50 percent of what they spent on infrastructure as subsidy, subject to a ceiling of Rs.50 crore, whichever is less," he said.

The government is also keen to set up two fabrication units in the country. So far, there is none.

"It (fabrication unit) is in the offing for quite some time now. Two units that we want to set up is in an advanced stage of processing in the government. We have got two applicants. It is in the approval stage."

There is only one Semi-Conductor Complex Limited in Chandigarh catering to this domain for the last couple of years. "It is not up to the current demand of the market."

The IT department is also focussing on manpower development in electronics.

It has designed certain schemes for faculty development in various states.

"This is faculty upgradation on behalf of the government. Once it is approved we will ask state governments to identify academic institutions of their choice. Faculty improvement and alignment with the latest needs of the industry is very crucial."

This will also help in bridging the industry-academia gap. Internal consultation regarding this scheme is going on and it will take a month or two for approval.

The government has envisaged an Electronics Development Fund to promote innovations. It is also in the formulation or approval stage. "We are pegging it about Rs.2,000 crore initially. Hopefully it will be through this fiscal," he said.