IESA Urges Govt to Address Issues Affecting ESDM Ecosystem

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It has appealed to the government to abolish angel tax for ESDM startups, provide support to create 50 intelligent electronics incubators, and to focus on “all-in India” products

The draft National Policy on Electronics (NPE) released by the Ministry of Electronics and Information Technology (MeitY) sets an ambitious target of creating a USD400 billion electronics manufacturing industry by 2025, primarily focusing on the consumer segment with mobile phone devices segment contributing to around 50 per cent of the production.

The NPE also aims at supporting “make for the world” initiative as over 54 per cent of the mobile phones manufactured in India would be exported by 2025.

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However, consumer segment will constitute less than 20 per cent of the total electronic system design and manufacturing (ESDM) market in India.

Nonetheless, India Electronics and Semiconductor Association (IESA) believes that there is a big opportunity in design led manufacturing to make India a global hub in intelligent electronics.

Considering this opportunity, IESA President Rajesh Ram Mishra has appealed to the government to address specific issues that will help promote a thriving ESDM ecosystem across all segments in the country.

Budget recommendations from IESA  

  1. The association has sought the government to address industry concerns on disincentive for domestic manufacturing and products designed in India due to differential duty structure in multiple segments.
  2. It has asked the government to abolish the angel tax for ESDM startups. IESA suggested creation of a seed fund of 1000 Crore which can be matched by industry and VCs to provide seed funding to build 1000 startups ESDM space.

Additionally, it urged the government to enable R&D through provisioning separate budget to fund projects of national interest in the Electronics & Semiconductor domain and enable collaborative R&D among PSUs, Indian SMEs and startups.

  1. IESA wants the government to provide support to create 50 intelligent electronics incubators collaborating with industry in various technology and industry verticals in Mission Mode, similar to Atal Innovation Mission.
  2. For scaling small and mid-size companies in ESDM space to become large MNCs like Huawei & ZTE, the government is urged to ensure domestic market access through stricter implementation of PMA, global market access through linkage of Indian government grant to developing countries with export from Indian ESDM companies and reduction in half the cost of financing for both R&D and manufacturing.
  3. The IESA pointed out that building secured digital infrastructure in India is critical considering the vulnerabilities arising due to geo political uncertainties. Therefore, it recommended the government to focus on “all-in India” products for strategic needs where every component used is designed and manufactured in India, a practice being followed in China today.

Telecom service providers who are one of the biggest consumers of electronics products & systems and today provide the back bone of our voice and data networks should be encouraged through policy to use “all-in India” products, the association said.

  1. Despite the Modified Special Incentive Package Scheme (MSIPS), large manufacturing setup in semiconductor and electronics is yet to come up.

IESA suggested that the new incentive scheme could focus on guaranteed market for certain percentage of production from these large ESDM manufacturers instead of purely focussing on early subsidy, similar to BOT model that is working well in construction of road, airports, etc, in the country.

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