By Richa Chakravarty
ELCINA (Electronic Industries Association of India) and Vittal Innovation City (VIC) entered into a joint venture (JV) to establish the country’s first cluster to manufacture electronics components. N Vittal, chairman, VIC, and Pawan Sharma, vice president, ELCINA, signed the MoU on February 3, 2012 in New Delhi. Currently, 21 companies including among others, Deki Electronics, Dixon Technologies, Elin Electronics, Sahasra Electronics, OEN India, Tandon Group and Victor Component Systems, have come together under the ELCINA banner to be a part of this cluster. The project is expected to shape up within a year.
ELCINA is into its first cluster model, which would assist the SMEs to manufacture electronic components and products for consumer electronics, power electronics and the lighting industry. Says N Vittal, “Unlike any other special economic zone (SEZ), this cluster will provide knowledge based services, manufacturing, R&D and incubation activities, which will create a synergy between industry and academia.”
The cluster will house training facilities for manpower development, housing for workers, research facilities, testing laboratories and supply chain support to provide a comprehensive ecosystem for electronics component and equipment manufacture.
ELCINA will establish an SPV for owning, managing and operating the cluster and VIC will be a partner and support the SPV in managing its operations. VIC will shoulder responsibilities of running the cluster based on its strengths. Initially VIC will provide support in value added services such as training, innovation, technology acquisition and financial guidance for the members Subsequently they would expand their role to include capital investment, identifying and acquiring land, providing common infrastructure as well as incubation of new ventures and technology.
Funds for the cluster
The Central government will provide funding not exceeding Rs 500 million (Rs 50 crore) per park of 100 acres, in addition to government equity, participating members will also invest in setting up their manufacturing facilities in this cluster.
According to Rajoo Goel, secretary general, ELCINA, this cluster will be developed in north India. “We have received positive indications from the Rajasthan government as well.”
An MoU has also been signed with the Institute of Information and Technology (IIT), Taiwan, to help companies to gain access to all Taiwanese companies. “If a member company requires a particular technology, it can mapped against what is available with the Taiwanese company and enable the creation of a JV or technology transfer. Also, Taiwanese companies have about 400 courses available, to train and help in skill development. Member companies can have access to this knowledge and customise it according to Indian conditions,” shares A Gururaj, managing director, VIC.
These clusters will also help in generating jobs. According to Vinod Sharma, managing director, Deki Electronics, “in the coming five years, this cluster concept will generate 20 million jobs in the country. Right from the operator and the middleman, to the higher levels of management, this cluster will generate 15,000 new jobs in the next two years.”
The biggest concern of the electronics industry is the long gestation period for earning returns on investments and the high costs which make it impossible for high value added electronics manufacturing to be viable. It is hoped that with the formation of this cluster, investors will earn an ROI 20-30 per cent within 3 years.