In a bid to increase the state’s electronics industry output to $100 billion by 2025, the Tamil Nadu government released a new electronics hardware manufacturing policy, seeking to contribute 25% of India’s total electronic exports to the world over a period of five years. The policy will undertake skill training for more than 1 lakh people by 2024 to meet the incremental human resource requirement projected by NSDC for Tamil Nadu, in electronics and hardware manufacturing sector.
Aiming to provide adequate infrastructure and supporting ecosystem to electronics system design and manufacturing (ESDM) companies and to attract major global ESDM players to invest in Tamil Nadu, the policy, christened Electronics Hardware Manufacturing Policy of Tamil Nadu, 2020, will seek to incentivise home-grown start-ups in the ESDM sector both in the component and original equipment and product manufacturing sub-sectors.
The policy targets to increase the level of value addition that is done in Tamil Nadu, especially across focus sectors such as mobile handsets, LED products, chip designs, PCBs, solar photovoltaic cells, medical electronics, and automotive electronics.
Aligned with the National Policy of Electronics 2019, the state government will provide special support for developing core competencies in the sub-sectors. The other focus areas are research and development programme to foster an environment of innovation, and conducive environment for ESDM start-ups, especially promoting the rapid growth of innovation-led technology enterprises involved in the design, development and manufacturing of technologically advanced solutions. It plans to attract at least two major FAB investments into Tamil Nadu, in the next three years.
According to the policy, all incentives offered by the state government to units in the electronics manufacturing industry will be in addition to the incentives offered by the Government of India to those units. Investments made from January 1, 2020 will be considered eligible for availing incentives.
The state government will formulate a special package of incentives for ESDM units in the MSME sector. This will include capital subsidy, interest subvention, low tension power tariff subsidy, generator subsidy, assistance for obtaining intellectual property and assistance in obtaining certifications. MSMEs will also be assisted to scale up their business to serve as a vendor base for large and mega investors in this sector.
For core investments, the policy has identified districts in three categories. For investments worth Rs 200-500 crore, capital subsidy in category A district would be 15%, in category B district 20% and in C category district 25%. For investments over Rs 500 crore, capital subsidy in A district would be 18%, B district 24% and in C district 30%.
The state is also planning to set up a Mega Electropreneur Centre (MEC) in the form of a Centre of Excellence for Hardware, Products & Ventures to facilitate easy access and to make it practical to build a robust ecosystem for start-ups and entrepreneurs. This CoE will include a fully self-contained facility to support end-to-end design, development, testing and certification of innovative hardware products, the policy said.
The state will also support start-ups in the electronics and hardware space by promoting the development and acquisition of IPs in ESDM sector, support well-functioning ATAL Tinkering Labs for the procurement of new, electronic equipment, establish a cloud server to connect all the incubation centres across the state and make it available to all the start-ups, at low or nominal costs.
The state government will encourage development of private ESDM parks with common infrastructure, amenities and waste handling facilities. The developers shall be eligible to apply for the following incentives prior to commencement of the park and will be sanctioned by the state government through the IDC.
The policy will offer subsidy on land lease cost for eligible projects in government owned industrial parks in C districts, land allotment will be made at 50% subsidised rate for land up to 20% of EFA. For private land in C category districts, 50% subsidy will be offered on cost of land as per guideline value up to an extent of 50 acres and subject to land cost not exceeding 20% of EFA and a cap of Rs 2 crore. The land cost will be excluded from the EFA calculation if this subsidy is availed.
To promote research and development in the electronics space, the Tamil Nadu government, through its investment promotion agency, will enter into twin city agreements with electronics manufacturing cities in countries such as Japan, Vietnam, South Korea, Taiwan, Israel and Singapore . Such agreements will promote collaborations through exchange of experience and information, joint cooperation plans, industry-specific programmes and projects, establishment of joint expert groups, implementation of skill development programmes and regular expert-level consultations.