State hardware policy mulls authority, innovation fund

Manufacturing hubs in industrial corridors; tax sops are suggested


With this in mind, the initial blueprint of the policy indicates setting up of an autonomous governing body — Electronics Hardware Authority (EHA) for hardware sector, development of electronics hardware manufacturing hubs and innovation fund. It will also arrange for grants to encourage R&D activities, soft loans assistance to offset levies if central & State governments and for market development activities and promotion of products, designed and manufactured in the State.

Official sources told Deccan Herald that the State, for the first time, is coming out with Electronics Hardware Policy with a thrust on creation of Electronics Hardware Manufacturing (EHM) hubs. These hubs, they said, would come up in the corridors of Bangalore-Tumkur; Shimoga-Hassan; Hubli-Dharwad; Mysore-Nanjanagud. The EHA, they indicated, would be announced simultaneously along with new and revised State IT Policy at the State’s annual flagship conclave — BangaloreIT.biz  in the second week of November, 2009.  Official sources said the policy has become imperative as electronic hardware sector has a lot of potential for large scale employment of ITI graduates, diploma holders, hardware Engineers as also semi-skilled persons with some training can be employed in this sector.

The EHM hubs planned at industrial corridors and be operated in line with Special Economic Zone policy are: Bangalore-Tumkur (for semiconductors, alternative/solar energy, aerospace, medical electronics, and embedded systems); Shimoga-Hassan: for manufacture of electronics components, plastics, metal-fabrication and for electronics manufacturing services; Hubli-Dharwar: for automotive electronics, high-tech machining, and high-tech tooling and Mysore-Nanjangud: existing electronics hardware manufacturing base for medical electronics and computer peripherals. The western (Shimoga-Hassan) and Northern (Hubli-Dharwar) hubs connecting southern hubs of Bangalore/Mysore, with Bangalore as logistics centre for air-freight connecting to Chennai through high-quality road network for ocean freight.

Value added products

The purpose is to promote Karnataka as leading destination for electronics hardware manufacturing industry by focusing on and encouraging high-technology, high-value-added electronics products. An integrated manufacturing ecosystem for select sunrise domains such as aerospace, alternative (solar) energy, medical electronics, automotive electronics, and embedded systems is contemplated. Further, according to draft prepared by MAIT for State government, accessed exclusively by Deccan Herald,  the EHA, would be headed by a Chief Development Commissioner and EHA shall function as nodal agency for all EHUs in the State. There is also a plan to create Karnataka Electronics Innovation Fund with initial corpus of Rs 1,000 crore to catalyse high-value-added electronics manufacturing. The corpus, to be generated through issue of 10-year State bonds, will go to provide funding to entrepreneurs for developing new products that will in turn be manufactured in the State.

The government will provide exemption of Sales Tax for EHUs located in an EHMH, for a period of 5 years. For new capital investments State would give up to 10 per cent of capital cost or Rs 1 crore as capital subsidy and other fiscal incentives on investments have been proposed.

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