It's provisions include single-window system for setting up units, land at concessional rates, electricity duty holiday for 15 years and reimbursement of VAT and CST
To tap the growing global and domestic market for electronics and attract Electronic System Design and Manufacturing (ESDM) players to transform Maharashtra into a manufacturing hub, the state government has formulated its first electronics policy.
The policy, which would also promote establishment of capital-intensive semi-conductor wafer fabrication (FAB) units in backward areas such as Vidarbha and Marathwada to boost production of hardware like LCD panels, would seek to ride on the Centre's plans to boost domestic manufacturing of electronics and reduce the import bill.
To be unveiled during the 'Make in India' week in Mumbai from February 13 to 18, the policy was approved by the state cabinet on Tuesday. It seeks to attract investments of $3 billion, with a turnover of $12 billion, and create one lakh additional jobs. It has provisions for a single-window system for setting up electronic units, land at concessional rates, an electricity duty holiday for 15 years and reimbursement of VAT and CST.
A senior state government official said that these FAB units were given incentives under the 2012 Modified Special Incentive Package Scheme (M-SIPS) of the Centre, which was subsequently amended in 2015. Among others, the policy grants 20% capital subsidy to units above a certain threshold in SEZ areas and 25% financial incentive to industries in non-SEZ areas.
"We will provide incentives to FAB units in backward areas like Vidarbha and Marathwada, and initially commit a minimum of Rs5,000 crore, which can be increased to Rs10,000 crore in a 10-year period. These units must be enlisted by the Government of India in its M-SIPS. They will get sops from the Centre and us. These projects bring in huge investments," said a senior state government official.
"Unlike the past, we have decided to grant interest subsidies to investment in the electronics sector," the official said, adding that sops like VAT and CST reimbursements, stamp duty exemptions, power tariff subsidy and other benefits included in the package scheme of incentives (PSI) would also be extended.
"These FAB units are largely based out of China, Taiwan, Japan and Korea," said the official, adding that there was a need to attract them to India and Maharashtra, considering their employment potential.
It is estimated that by 2020, the import of electronic goods will overtake the fuel import bill, especially in view of falling oil prices. Around 65% demand for electronic products is met through imports.
Taiwanese contract manufacturer Foxconn has committed an investment of Rs35,000 crore in Maharashtra.
The Centre, which is trying to boost domestic manufacturing in electronic systems through its flagship 'Make in India' programme, estimates that the consumer electronics market will touch $29 billion by 2020.
A boost for local manufacturing will create jobs, meet rising domestic demand and help in tapping international markets.
According to the Centre, India has the third-largest pool of scientists in the world and also has skilled manpower. The demand in the sector is expected to surge due to government schemes like the National Optical Fibre Network (NOFN) and the National Knowledge Network (NKN) as also the overall boost to broadband.
Scope of IT/ITES policy expanded
In a boost to service providers dealing in visa processing facilitation, travel and tourism back offices and television channels dealing with entertainment, sports and travel, the state's Information Technology/IT Enabled Services (IT/ITES) policy has been amended to include these in its ambit. The state cabinet took a decision in this regard on Tuesday.
This amendment to the policy, which was unveiled in 2015, has been done on the basis of suggestions of stakeholders like the Indian Broadcasting Federation, VFS Global Services, Mill Owners Association, MCHI-CREDAI and Indian Merchants Chamber.
"The stakeholders said there is potential in these sectors, so they should be included in the ambit of the IT/ITES policy," said a senior state government official.
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