The Union Cabinet approved the new National Electronics Policy 2019 that aims to achieve a turnover of $400 billion (about Rs. 26 lakh crore) for the electronics system design and manufacturing (ESDM) sector by 2025, while generating employment opportunities for one crore people.
The policy will enable flow of investment and technology, leading to higher value addition in the domestically manufactured electronic products and increased manufacturing of electronics hardware for local use as well as exports.
The policy has introduced new “easier to implement” incentive schemes, including interest subvention scheme and credit default guarantee, to replace some of the existing ones under the National Electronics Policy 2012.
The new policy proposes to provide interest subsidy of 4% on loans up to Rs. 1,000 crore on plant and machinery, in case of larger loans, the subsidy will be limited to Rs. 1,000 crore.
The government also proposes to create a fund to provide default guarantee of up to 75% to the banks for plant and machine loans of up to Rs. 100 crore. “This will eliminate the need for small and new investors to provide third party collateral the scheme will be on the pattern of credit guarantee being provided by SIDBI for SME sector.
However, for both these schemes the consultations are on with the Department of Expenditure, the official added. These schemes will be launched once the NPE 2019 is notified.
To promote creation of an ecosystem, the NEP 2019 has pitched for 2.0 version of the Electronics Manufacturing Cluster scheme, under which infrastructure support will be provided for a group of industries that are part of the product supply chain rather than individual industries. The NPE 2019 has also proposed creating a Sovereign Patent Fund to acquire intellectual property for chips and chip components.