Minimum funds cap in electronics industry lowered

In a bid to boost investment in the electronics manufacturing sector, the Centre has decided to modify a proposal on special incentive package by lowering investment threshold. 

The Department of Electronics and Information Technology revised the limit for setting up an assembly test mark packaging (ATMP) facility to Rs 1 crore as against the previous limit of Rs1,000 crore.

“According to the proposal, minimum investment for manufacturing items like mobile accessories is Rs 1 crore. For memory fabrication units, the upper limit is Rs 5,000 crore,” an official in the Ministry told Deccan Herald.

Besides, the modified proposal gives the companies an option to declare financial closure of projects in stages and avail subsidies accordingly. This is expected to help companies to set up units, said the official.

As the earlier policy mandated a minimum investment of Rs 1,000 crore, several top companies refrained from investing in the sector because of the global economic crisis in 2008.

To avoid a similar situation in case of another economic crisis, the government has decided to lower the investment threshold, the official said.

The Union Cabinet recently approved a Rs 10,000 crore incentive package under the Modified Special Incentive Package Scheme (M-SIPS) for makers of electronics goods and components. The policy will be valid for three years and the incentives for 10 years.

22 pc growth

According to government estimates, electronics manufacturing industry in the country is projected to grow annually at 22 per cent to $125 billion by 2014 and $400 billion by 2020.

India is aiming to generate around $400 billion in revenues from electronics manufacturing by 2020, with an investment of around $100 billion, according to the National Electronics Policy 2011.

The incentive package will be a part of the new electronic policy which is expected to be approved by the Union Cabinet soon.