As the government pushes to get India’s electronics manufacturing ecosystem in place on a war footing, ELCINA has taken the lead in setting up electronic manufacturing clusters. Its greenfield project in Rajasthan is on track as far as the timeline and investments are concerned
By Srabani Sen
Friday, June 21, 2013: The Bhiwadi electronics cluster in Rajasthan, an early initiative of the electronics components makers’ association, ELCINA, has reached its first major milestone. The members of this cluster have submitted the ‘keenness’ money to RIICO (Rajasthan State Industrial development and Investment Corporation). This is to reserve 100.7 acres of land at the Salarpur Industrial Area, Bhiwadi, Rajasthan, in favour of ELCINA Electronics Manufacturing Cluster Pvt Ltd, which is the special purpose vehicle (SPV) for this project.
“Keenness money is the non-refundable security deposit given to government agencies when they allot a piece of land to a private organisation. In our case, it was 10 per cent of the total cost of the bare land paid in April 2013 to RIICO. As a special case, we have been given the assurance that this money is refundable in the extreme case of the project not seeing the light of the day,” explains Rajoo Goel, secretary general, ELCINA.
Commenting on the achievement, T Vasu, president, ELCINA, and director, Tandon Group, says, “The Bhiwadi electronics cluster is the first greenfield cluster in India to reach this stage. In fact, we have taken the lead in developing three electronics clusters in India.”
Complementing Elcina for the achievement, Subhash Goyal, managing director, Digital Circuits Pvt Ltd, a member of the Bhiwadi cluster, says, “This is a major milestone achieved by ELCINA towards its commitment to form the first EMC. This cluster will act as the model for other clusters that are being planned in many other parts of the country.”
States BS Sethia, director, Elin Electronics Ltd, “The cluster initiative of ELCINA is a realisation of a long cherished dream of value-added manufacturing in India. The most important factor responsible for this development is the intensive efforts of ELCINA. The government of Rajasthan has complemented this by showing similar seriousness as the Central government, by pledging its support in the recently announced Budget.”
Says Vinod Sharma, managing director, Deki Electronics, another member of the Bhiwadi cluster, “This cluster is a proof that India can competitively manufacture electronic hardware even when the sector is faced with the issue of zero per cent import duty. India’s opportunity to manufacture in this globally competitive market was written off by many experts and captains of the industry. But ELCINA members are getting together to prove them wrong.”
Agrees Varun Manwani, director, Sahasra Group, “India has already proved itself to be a software hub, R&D hub and an automotive hub. It’s now time for India to show to the world that we can be an electronics hardware manufacturing hub as well. The Bhiwadi project is the first step in the long term plan. Electronics manufacturers have been waiting for years and now it’s time for them to contribute to the ‘India shining’ story.”
About 60 per cent of the total land allotted for the Bhiwadi cluster, which is 60 acres, will be used by the manufacturing companies to set up their plants, and the remaining 40 acres will be used for common infrastructure and other facilities like roads, the sewage system, green areas, a tool room, etc. So 40 per cent of the saleable area has already been occupied by the manufacturers.
How the members will benefit
Fiem Industries is all set to start its state-of-the-art R&D and testing centres and a manufacturing unit at this cluster to manufacture LED lighting products, LED display panels, electronic drivers, etc. Says GV George, corporate head, R&D, Fiem Industries Ltd, “The Bhiwadi cluster will lead the way for other electronics clusters to come up in north India. We extend all our support to the project and will help it to start off as soon as possible.”
According to Subhash Goyal, the cluster will give Digital Circuits an opportunity to be competitive. “The world class infrastructure, logistic support, proximity to customers and suppliers will reduce the disability factor faced by the electronic manufacturers,” he adds.
Sahasra Group, a member of this cluster, expects to benefit immensely through ready availability of components that other units in the cluster will be manufacturing at competitive prices. “We expect to increase our exports more than two-fold after we become fully operational in the cluster,” adds Amrit Manwani, CMD, Sahasra Group.
Roadmap for the future
ELCINA expects the member companies of this cluster to start production in Bhiwadi within two to three years. On its part, ELCINA has filed the initial application for an electronics manufacturing cluster (EMC) grant with DeitY on May 17, 2013, along with the final draft of the detailed project report (DPR) to get the time advantage while implementing the project.
As per the EMC policy guidelines of DeitY, a greenfield cluster application goes through a two-stage process—the preliminary and final stages. DeitY typically gives an ‘in-principle’ approval based on the preliminary application, which contains macro information about the project. After this, the applicant gets six months’ time to submit the final application, which involves formation of the SPV, DPR and other legal and statutory compliances. “We have completed these requirements in advance, and as soon as we get the in-principle approval, we can submit the final application,” says Rajoo Goel.
RIICO has also applied for the environment clearance (EC) of the project, which is expected to come by July. “Once RIICO gets the clearance, the cluster will get a formal letter of reservation. Meanwhile, various surveys of the land are being conducted for the master plan and design. This will tentatively be completed by the end of July. After the master plan is complete and EC received, civil work will be initiated,” informs Rajoo Goel.
“Once we get the EC, we need to focus on selling the remaining land. At the moment, the project is more open to the core ELCINA members, but once it is open to the entire electronics industry, I am sure it will not take much time to sell the entire land. I believe that within seven-eight months after the EC, we will get the possession of the land,” says Amit Jain, managing director, Duggar Power Products Pvt Ltd, which would manufacture power products like transformers, UPS systems, voltage stabilisers, etc, at the Bhiwadi manufacturing unit, which it plans to start as soon as it gets the possession of the land.
ELCINA has also initiated the process of obtaining quotations from survey agencies to conduct the soil and topographical surveys. “Our target is to complete the survey within the next 20-25 days and proceed with the master plan, which we target to complete by July end,” adds Rajoo Goel.
Benefits under EMC policy
As per the guidelines of the EMC policy, all the member companies of the cluster are eligible for incentives under the Modified Special Incentive Package Scheme (M-SIPS). As a result, the manufacturers will get reimbursements (cash subsidy) of up to 25 per cent of their capital expenditure. In addition, any central taxes paid on the purchase of plant and machinery would be reimbursed as well.
In addition to this, the cluster will be eligible to get Rs 500 million (Rs 50 crore) as an EMC grant from DeitY for the development of common infrastructure and facilities.
ELCINA has proposed that this be recognised as a mega project by the Rajasthan government, so that the member companies can get additional benefits based on the state’s policy and other fiscal benefits such as a cash subsidy on output tax, an interest rate subsidy, reduction in electricity duty, exemption on stamp duty, etc. This will reduce the overall expenditure of the project for individual manufacturers.
Some other benefits are one-time exemption of entry tax on plant, machinery, parts and accessories; reduced Rajasthan state VAT not exceeding 5 per cent on all raw material, components and parts; 50 per cent exemption on land tax, mandi fees and stamp duty on purchased leases of land; and 50 per cent exemption on land use conversion charges.
“The Rajasthan EMC cluster will create over 10,000 direct jobs in manufacturing. Additionally, it will also support an equal number of jobs in support services. It will truly create a high value-added environment that is much needed in India’s electronics industry. Combined with software leadership, India could well become the electronics hub for the entire world. I would say that this cluster’s formation is the first step towards achieving that objective,” says Amrit Manwani.
“We expect that with the supplementary incentives package, the capabilities of the cluster would be further enhanced to successfully compete with cheap Chinese imports. This cluster will hopefully become a pioneer for the revival of India’s manufacturing prowess in the time to come, and a precedent to be emulated,” concludes BS Sethia.
Members of Bhiwadi cluster
East India Technologies Pvt Ltd
Elin Electronics Ltd
Fiem Industries Ltd
Rosy Electronics Pvt Ltd
Deki Electronics Ltd
Digital Circuits Pvt Ltd
E-Pack Polymers Pvt Ltd
Leading Point Powertronics
Sahasra Electronics Pvt Ltd
Victor Component Systems Pvt Ltd
RDC Marketing (P) Ltd
Speedofer Components Pvt Ltd