The Electronics Development Fund (EDF) is to be used by companies to develop new technologies. The aim is to provide an impetus to emerging electronics enterprises, thereby enabling a sturdy electronics ecosystem in the country.
By Shweta Sengar
As part of the government’s ‘Digital India’ initiative, a plan has been conceived to develop the electronic system design and manufacturing (ESDM) sector in order to achieve net zero imports by 2020. Setting up the Electronics Development Fund (EDF) is one of the key strategies that will enable creating a healthy ecosystem for the electronics industry.
Creating a vibrant ecosystem for innovation, research and development (R&D) along with increased industry involvement is indispensable for a booming electronics industry.
The Department of Telecommunications (Ministry of Communications and Information Technology) has come up with EDF, which has been set up as a ‘fund of funds’ and it will, through its ‘daughter funds’, provide risk capital to companies developing new technologies in the area of electronics, nanoelectronics and IT. The EDF is an open-ended fund and will be managed by Small Industries Development Bank of India (SIDBI.)
According to a report in Hindustan Times, a note from the Department of Electronics and Information Technology (DeitY) reads as follows: “There is a great need to promote local electronics manufacturing. It is of vital importance since the present domestic demand for electronics in India stands at around US$ 45 billion and is anticipated to grow at a compounded annual growth rate (CAGR) of 22 per cent for the period 2009-2020. With the current growth rate, manufacturing of electronics hardware in the country is likely to grow to US$ 42 billion by the end of 2014 and US$ 105 billion by 2020.”
The policy provides a framework whereby the decision to support R&D is based on market conditions and through professionals, well versed with the industry’s requirements.
Developing domestic design capabilities
Apart from providing risk capital to companies venturing into new technologies in the field of electronics and IT, EDF will also support the acquisition of foreign companies and technologies for products imported in large volume into the country. The prime focus of the ‘daughter funds’ would be to develop domestic design capabilities.
Any fund that is registered in India and abides by the relevant rules and regulations, including those of the Securities and Exchange Board of India (SEBI) on venture funds, and that has been set up to meet the aforementioned objectives will be entitled for support from EDF.
Offering risk capital for innovation`
R&D and innovation in electronics is very important, due to the fast pace of technological advancements in this field. The National Policy on Electronics 2015-2020 outlines the setting up of an Electronics Development Fund to promote a healthy and resilient electronics ecosystem in the country. The EDF encapsulates the following features:
- The EDF will be created in a financial institution like SIDBI or a similar organisation.
- The EDF should make investments in the daughter funds, which in turn will make investments in the ESDM, nanotechnology and IT sectors.
- In the ESDM sector, the EDF’s participation in venture capital funds will be across the value chain and its ecosystem, including fabless semiconductor start-ups, R&D, material technologies required for electronic devices and in design and manufacturing.
Deity Speaks
Dr Ajay Kumar, joint secretary, Department of Electronics and Information Technology, expresses his views on the EDF in a conversation with Sudeshna Das, senior executive editor, Electronics Bazaar “The government is fully committed to promoting the industry and providing support to it. Recently, the government approved an Electronics Development Fund to invest in entrepreneurial ventures in the IT and electronics space.
“The fund, which is like a ‘fund of funds’, will participate in ‘daughter funds’, which in turn will provide risk capital to companies developing new technologies in the area of electronics, nanoelectronics and IT.
“The corpus of this open-ended fund will be managed by SIDBI or a similar financial institution, and the government’s investment will be decided on a case-to-case basis, determined by market dynamics. This is expected to act as a catalyst for attracting foreign funds into the electronics sector, as government investments in these ventures will give an assurance to foreign companies.”
For more information
Please visit: http://deity.gov.in/esdm/electronics-development-fund-edf-policy
