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Incentives buzz up industry's electronics' manufacturing pursuit

Billions of dollars likely to flow as investment size of proposals under M-SIPS swells

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Attractive government policies and incentives for producing electronic goods locally have seen the initial small investments cleared under the Modified-Special Incentive Package Scheme (M-SIPS) balloon to large investment proposals.

Of late, leading Indian industrial houses are showing keen interest in the sector, said a senior government official of the department of electronics and information technology (DeitY).

Ajay Kumar, joint secretary, DeitY, told dna that it would augur well for the government initiatives such as Make in India and Digital India, which are looking to bring down imports of electronic goods and components to zero by 2020.

India's current electronic goods imports are to the tune of $100 billion a year and are projected to cross $400 billion a year by 2020.

Kumar said while earlier investors were quoting investment figures in hundreds of crores in rupees, they are now talking of proposals running into several thousands of crores of rupee and billions of dollars.

"Earlier, the investment was not large, investors would talk of putting money in hundreds of crores. That has changed now, we are seeing people talking of investments in thousands of crores of rupee and billions of dollars," he said.

According to him, the uptick in electronic goods proposals began as a trickle with five applications approved under M-SIPS worth Rs 298.39 crore in January-March quarter of FY14, climbing to four proposals amounting to Rs 383.21 crore cleared in the next quarter. In the September quarter of the last fiscal, DeitY gave its nod to 12 applications valued at Rs 2,026.99 crore, which swelled to Rs 3,059.19 crore for just five approvals in the March quarter of the same fiscal.

This figure has remained stable in the first quarter (March-June) of the current fiscal at Rs 3,027.42 crore for nine proposals cleared.

Kumar said the change in the profile of investors was also interesting as it moved from electronics companies, who had survived, re-investing to multinationals (MNCs) and now large Indian Industrial houses.

"Indian companies, who were not in electronics manufacturing, are now getting into electronics. Indian companies have a lot of money today. They have a whole range of sectors to choose from. That they are getting into electronic manufacturing shows the amount of interest this sector is generating in the country," he said.

At the Digital India launch, large corporate houses from Bharti Airtel to Reliance Industries, Munjal Group, Vedanta, Reliance Communications and others announced investments worth Rs 4.5 lakh crore. Kumar expects a large chunk of this to come into electronic products. Another positive aspect was the rising interest of states in this endeavour of the central government.

"States have also started to compete very aggressively. Initially, there was lukewarm response from the states in electronic manufacturing, thinking that there would not be enough opportunity for employment in this. Now, states are awake and conscious of the great opportunity this sector provides," said the government executive.

He said recent times have seen states coming out with pro-electronics policies, and 16 states have already come forward to set up electronics manufacturing clusters that would provide readymade land to investors.

"We have over 6,000 acre of land, which have been approved, and another 5,000-6,000 acre is in pipeline for people looking to set up electronic units in the country," he said.

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