National Policy On Electronics

The Union Cabinet on October 25 approved the National Policy on Electronics 2011. The draft National Policy on Electronics was released for public consultation and it has now been finalized based on comments from various stakeholders.

India is one of the fastest growing markets of electronics in the world. There is potential to develop the Electronic System Design and Manufacturing (ESDM) sector to meet the domestic demand as well as to use the capabilities so created to successfully export ESDM products from the country. The National Policy on Electronics aims to address the issue with the explicit goal of transforming India into a premier ESDM hub.

The strategies include setting up of a National Electronics Mission with industry participation and renaming the Department of Information Technology as Department of Electronics and Information Technology (Deity). The Department has since been renamed on February 26, 2012.

Key Objectives

• To create an eco-system for a globally competitive Electronic System Design and Manufacturing (ESDM) sector in the country to achieve a turnover of about USD 400 billion by 2020 involving investment of about USD 100 billion and employment to around 28 million people at various levels.
• To build on the emerging chip design and embedded software industry to achieve global leadership in Very Large Scale Integration (VLSI), chip design and other frontier technical areas and to achieve a turnover of USD 55 billion by 2020.
• To build a strong supply chain of raw materials, parts and electronic components to raise the indigenous availability of these inputs from the present 20-25 per cent to over 60 per cent by 2020.
• To increase the export in ESDM sector from USD 5.5 billion to USD 80 billion by 2020.
• To significantly enhance availability of skilled manpower in the ESDM sector.
• Special focus for augmenting postgraduate education and to produce about 2500 PhDs annually by 2020.
• To create an institutional mechanism for developing and mandating standards and certification for electronic products and services to strengthen quality assessment infrastructure nationwide.
• To develop an appropriate security ecosystem in ESDM.
• To create long-term partnerships between ESDM and strategic and core infrastructure sectors – Defence, Atomic Energy, Space, Railways, Power, Telecommunications, etc.
• To become a global leader in creating Intellectual Property (IP) in the ESDM sector by increasing fund flow for R&D, seed capital and venture capital for start-ups in the ESDM and nano-electronics sectors.
• To develop core competencies in strategic and core infrastructure sectors like telecommunications, automotive, avionics, industrial, medical, solar, Information and Broadcasting, Railways, etc through use of ESDM in these sectors.
• To use technology to develop electronic products catering to domestic needs, including rural needs and conditions, as well as international needs at affordable price points.
• To become a global leader in the Electronic Manufacturing Services (EMS) segment by promoting progressive higher value addition in manufacturing and product development.
• To expedite adoption of best practices in e-waste management.
• To source, stockpile and promote indigenous exploration and mining of rare earth metals required for manufacture of electronic components.

trategies

To achieve these objectives, the policy proposes the following strategies:

• Creating eco-system for globally competitive ESDM sector:The strategies include provision of fiscal incentives for investment, setting up of electronic manufacturing clusters, preferential market access to domestically manufactured electronic products, setting up of semiconductor wafer fabrication facilities, industry friendly and stable tax regime. Based on Cabinet approval, a high level Empowered committee has been constituted to identify and shortlist technology and investors for setting up two semiconductor wafer manufacturing fabrication facilities. Based on another Cabinet approval a policy for providing preference to domestically manufactured electronic goods has been announced. Separate proposals have also been considered by the Cabinet for approval of Modified Special Incentive Package for the ESDM Sector and for setting up of Electronics Manufacturing Clusters (EMCs).
• Promotion of Exports: The strategies include aggressive marketing of India as an investment destination and providing incentives for export.
• Human Resource Development: The strategies include involvement of private sector, universities and institutions of learning for scaling up of requisite capacities at all levels for the projected manpower demand. A specialisd Institute for semiconductor chip design is also proposed.
• Cyber security: To create a completely secure cyber eco-system in the country, through suitable design and development of indigenous appropriate products through frontier technology/product oriented research, testing and validation of security of products.
• Strategic electronics: The strategies include creating long-term partnerships between domestic ESDM industry and strategic sectors for sourcing products domestically and providing Defense Offset obligations for electronic procurements through ESDM products.
• Electronics in other sectors: The strategy includes supporting and developing expertise in the electronics in the following sectors of economy: automotive, avionics, Light Emitting Diodes (LEDs), Industrial, medical, solar photovoltaics, Information and Broadcasting, Telecommunications, Railways, Intelligent Transport Systems, and Games and Toys.
• Handling e-waste: The strategy includes various initiatives to facilitate environment friendly e-waste handling policies.

Current Scenario

• The Electronics industry reported at USD 1.75 trillion is the largest and fastest growing manufacturing industry in the world.
• It is expected to reach USD 2.4 trillion by 2020.
• The demand in the Indian market was USD 45 billion in 2008-09 and is expected to reach USD 400 billion by 2020.
• Domestic demand is expected to be driven by growth in income levels leading to higher off-take of electronics products, automation demands of corporate sector and the government`s focus on e-governance.
• The domestic production in 2008-09 was about USD 20 billion. However, the actual value-addition in the domestically produced electronic product is very low, ranging between 5 to 10 percent in most cases.
• At the current rate of growth, domestic production can cater to a demand of USD 100 billion in 2020 as against a demand of USD 400 billion and the rest would have to be met by imports.
• This aggregates to a demand supply gap of nearly USD 300 billion by 2020.