Rs 100 billion fund to push R&D in electronics in India

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Information Technology in India has all along been synonymous to software services. The central government is trying to change the perception by turning its focus to other demanding areas within IT such as electronic hardware manufacturing. The department of information and technology (DIT) has formulated a proposal to create a Rs 100 billion corpus to encourage private sector research and development activities in electronics.

“We hope the fund will come to existence by 2012. However, we cannot give a final deadline because the proposal is pending several approvals including that of the Cabinet,” said Ajay Kumar, joint secretary of DIT. “However, the fund was the missing part in the measures that the department has initiated to foster the growth of the electronics sector in India. We will surely go ahead with it. We will provide the ‘risk capital’ and the ‘daughter funds’ created from the main fund will be run by professional managers. Government’s role in management will be restricted to the minimum.”

The Centre will provide monetary assistance anywhere between 25 per cent and 100 per cent depending on requirements. Professional fund managers will have the final say in assessing the proposals, nature of the ‘daughter funds’ and prospective recipients of the money, Kumar said.

The fund is of prime importance because the immediate need of the hour is to create an electronics component base in India. Though the country consumes over 12 per cent of the total global electronics output, over 80 per cent of the inputs/finished goods are imported. The impending opportunity for the domestic sector is about US$ 400 billion over the next 10 years, Kumar said. “We need both domestic and foreign investments to the tune of US$ 100 billion every year over the next 10 years,” he added.

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