Create More Electronic Mfg Clusters in India: ISA

by Manu Sharma    Feb 24, 2010

India Semiconductor Association (ISA), the trade body representing the semiconductor driven industry in India is requesting the government to consider promoting existing clusters and create new electronic manufacturing clusters in the country.

As budget recommendations for FY 2010-11, which ISA has submitted to the Government of India, the organization has recommended creating islands of excellence by encouraging and planning for the expansion of existing centers such as Sriprembudur, Noida, etc. and identify more locations to set up clusters to create a complete ecosystem where all the segments of the value chain are available at one location. Besides provide contiguous land and infrastructure to the industry to these clusters.

B V Naidu, chairman, ISA said, "There are huge growth opportunities for the electronic industry in India, but there have been some missed opportunities in the past decade. So, while the future holds a lot of promise, we need to address existing challenges in infrastructure, taxation, supply chain and logistics, labour laws, R&D and funding."

ISA has around 130 members from India and aims to establish India as the preferred global destination for semiconductor and solar photovoltaic companies. This includes chip design and embedded software companies, the solar fabs and the related ecosystem. In fact, ISA has played a prominent role in working with the government in the formation of the Indian Semiconductor Policy 2007.

"The budget recommendations which ISA has submitted to the government, envision a robust ecosystem that will attribute to promoting the sector and enhancing the domestic offerings and this will eventually lead to growth," said Naidu.

ISA believes that the recommendations will greatly enhance the competitiveness of the Indian electronics and systems design industry. "The government should encourage incubating Indian start-ups, set up a focused venture fund of about $50 million to provide seed and start-up capital for the new ventures to undertake R&D and product development," he said.

ISA has also requested the government for extension of fiscal benefits under the STPI scheme till the year 2015 as a large number of companies have been unable to avail of the Special Economic Zones (SEZ) scheme due to a variety of factors beyond their control, including location issues.

Naidu said "Made for India" goods needs encouragement specifically designed for India. Developmental sector can benefit from biometric readers, smart meters, micro payment devices, and low cost devices.

ISA has also asked for the creation of a R&D fund to incentivize research, where the government and the industry bodies are stake holders. Besides rationalization of tax structure that needs to be put in place in order to encourage long term investment by the companies.

Among the other recommendations of ISA includes: Extension of direct service tax exemption to STP and EOU Units akin to SEZ units. Presently, requiring STP units to avail of the same exemption through the refund route is not logical and cumbersome. Establish ‘National Electronics Mission’, a nodal agency for the electronics industry within DIT and with direct interface to the Prime Minister’s Office (PMO). The nodal agency will help in the synchronized functioning of the industry and will enhance the ease of doing business.