The Union Cabinet on Tuesday approved the National Electronics Policy, which targets domestic production of electronics goods to touch $400 billion by 2025 against the current around $80 billion.
The striking feature of the policy is the proposed interest subvention scheme, wherein it is suggested that an interest subsidy of 4% will be provided on loans
of up to Rs 1,000 crore on plant and machinery. In case of a larger loan, subsidy will be limited to Rs 1,000 crore.
Currently, the department of expenditure is being consulted on it after the completion of stakeholders’ consultation.
Electronics and IT minister Ravi Shankar Prasad said around 1 crore jobs are likely to be created under the new policy.
The interest subvention scheme proposes to provide interest subsidy on the loan taken by the investor to offset the disability of financing faced by the manufacturers in India due to higher interest rate compared with the interest rate on loans in other competing countries.
Other scheme proposed under the policy is credit guarantee fund scheme, which will create a fund to provide default guarantee to the banks up to 75% of the loan on plant and machinery for loans of up to `100 crore.
This will eliminate the need for small and new investors to provide third-party collateral currently being demanded by banks for giving such loans. The scheme will be on the pattern of credit guarantee being provided by Sidbi for the SME sector.
A revised electronics manufacturing clusters will replace the existing scheme. As per the revised cluster scheme, support for creating infrastructure and common facilities will be provided in collaboration with state governments. It is also being proposed to create a sovereign patent fund to acquire IPs for chips and chip components so that it can be made available to Indian entrepreneurs at very low cost.
The government has proposed to provide suitable direct tax benefits for setting up a new manufacturing unit or expansion of an existing unit.
The policy also proposes to promote a forward looking and stable tax regime, including advance intimation to the industry to plan investments in the form of phased manufacturing programme in various segments of electronics, with a sunset clause.
Production of mobile handsets, TVs and LED products (such as light bulbs) has gone up significantly in the recent past, primarily due to the initiatives of the government.
Electronics production has grown by 26.7% annually for the last four years and many investors have shown interest for making large investment in the sector.
Source : PTI