Approval of National Policy on Electronics 2012

The Union Cabinet on October 25 approved the National Policy on Electronics 2012. The draft National Policy on Electronics was released for public consultation and it has now been finalized based on comments from various stakeholders.

India is one of the fastest growing markets of electronics in the world. There is potential to develop the Electronic System and Design and Manufacturing (ESDM) sector to meet our domestic demand as well as to use the capabilities so created to successfully export ESDM products from the country. The National Policy on Electronics aims to address the issue with the explicit goal of transforming India into a premier ESDM hub.

The strategies include setting up of a National Electronics Mission with industry participation and renaming the Department of Information Technology as Department of Electronics and Information Technology (Deity). The Department has since been renamed on February 26, 2012.

The policy is expected to create an indigenous manufacturing eco-system for electronics in the country. It will foster the manufacturing of indigenously designed and manufactured chips creating a more cyber secure ecosystem in the country. It will enable India to tap the great economic potential that this knowledge sector offers. The increased development and manufacturing in the sector will lead to greater economic growth through more manufacturing and consequently greater employment in the sector.

The Policy envisages that a turnover of USD 400 billion will create an employment for two million people.

ESDM is of strategic importance as well. Not only in internal security and defence, the pervasive deployment of electronics in civilian domains such as telecom, power, railways, civil aviation, etc. can have serious consequences of disruption of service. This renders tremendous strategic importance to the sector. The country, therefore, cannot be totally dependent on imported electronic components and products.

The key objectives of the Policy are:

(i) To create an eco-system for a globally competitive Electronic System Design and Manufacturing (ESDM) sector in the country to achieve a turnover of about USD 400 billion by 2020 involving investment of about USD 100 billion and employment to around 28 million people at various levels.

(ii) To build on the emerging chip design and embedded software industry to achieve global leadership in Very Large Scale Integration (VLSI), chip design and other frontier technical areas and to achieve a turnover of USD 55 billion by 2020.

(iii) To build a strong supply chain of raw materials, parts and electronic components to raise the indigenous availability of these inputs from the present 20-25 per cent to over 60 per cent by 2020.

(iv) To increase the export in ESDM sector from USD 5.5 billion to USD 80 billion by 2020.

(v) To significantly enhance availability of skilled manpower in the ESDM sector. Special focus for augmenting postgraduate education and to produce about 2500 PhDs annually by 2020.

(vi) To create an institutional mechanism for developing and mandating standards and certification for electronic products and services to strengthen quality assessment infrastructure nationwide.

(vii) To develop an appropriate security ecosystem in ESDM.

(viii) To create long-term partnerships between ESDM and strategic and core infrastructure sectors - Defence, Atomic Energy, Space, Railways, Power, Telecommunications, etc.

(ix) To become a global leader in creating Intellectual Property (IP) in the ESDM sector by increasing fund flow for R&D, seed capital and venture capital for start-ups in the ESDM and nanoelectronics sectors.

(x) To develop core competencies in strategic and core infrastructure sectors like telecommunications, automotive, avionics, industrial, medical, solar, Information and Broadcasting, Railways, etc through use of ESDM in these sectors.

(xi) To use technology to develop electronic products catering to domestic needs, including rural needs and conditions, as well as international needs at affordable price points.

(xii) To become a global leader in the Electronic Manufacturing Services (EMS) segment by promoting progressive higher value addition in manufacturing and product development.

(xiii) To expedite adoption of best practices in e-waste management.

(xiv) To source, stockpile and promote indigenous exploration and mining of rare earth metals required for manufacture of electronic components.

To achieve these objectives, the policy proposes the following strategies:

(i) Creating eco-system for globally competitive ESDM sector: The strategies include provision of fiscal incentives for investment, setting up of electronic manufacturing clusters, preferential market access to domestically manufactured electronic products, setting up of semiconductor wafer fabrication facilities, industry friendly and stable tax regime. Based on Cabinet approval, a high level Empowered committee has been constituted to identify and shortlist technology and investors for setting up two semiconductor wafer manufacturing fabrication facilities. Based on another Cabinet approval a policy for providing preference to domestically manufactured electronic goods has been announced. Separate proposals have also been considered by the Cabinet for approval of Modified Special Incentive Package for the ESDM Sector and for setting up of Electronics Manufacturing Clusters (EMCs).

(ii) Promotion of Exports: The strategies include aggressive marketing of India as an investment destination and providing incentives for export,

(iii) Human Resource Development: The strategies include involvement of private sector, universities and institutions of learning for scaling up of requisite capacities at all levels for the projected manpower demand. A specialized Institute for semiconductor chip design is also proposed.

(iv) Developing and mandating standards to curb inflow of sub-standard and unsafe electronic products by mandating technical and safety standards which conform to international standards.

(v) Cyber security: To create a complete secure cyber eco-system in the country, through suitable design and development of indigenous appropriate products through frontier technology/product oriented research, testing and validation of security of products.

(vi) Strategic electronics: The strategies include creating long-term partnerships between domestic ESDM industry and strategic sectors for sourcing products domestically and providing Defense Offset obligations for electronic procurements through ESDM products.

(vii) Creating ecosystem for vibrant innovation and R&D in the ESDM sector including nanoelectronics. The strategy includes creation of an Electronic Development Fund.

(viii) Electronics in other sectors: The strategy includes supporting and : developing expertise in the electronics in the following sectors of economy: automotive, avionics, Light Emitting Diodes (LEDs), Industrial, medical, solar photovoltaics, Information and Broadcasting, Telecommunications, Railways, Intelligent Transport Systems, and Games and Toys.

(ix) Handling e-waste: The strategy includes various initiatives to facilitate environment friendly e-waste handling policies.

Background:

The Electronics industry reported at USD 1.75 trillion is the largest and fastest growing manufacturing industry in the world. It is expected to reach USD 2.4 trillion by 2020. The demand in the Indian market was USD 45 billion in 2008-09 and is expected to reach USD 400 billion by 2020. Domestic demand is expected to be driven by growth in income levels leading to higher off-take of electronics products, automation demands of corporate sector and the government`s focus on e-governance. The domestic production in 2008-09 was about USD 20 billion. However, the actual value-addition in the domestically produced electronic product is very low, ranging between 5 to 10 percent in most cases. At the current rate of growth, domestic production can cater to a demand of USD 100 billion in 2020 as against a demand of USD 400 billion and the rest would have to be met by imports. This aggregates to a demand supply gap of nearly USD 300 billion by 2020. Unless the situation is corrected, it is likely that by 2020, electronics import may far exceed oil imports. This fact goes unnoticed because electronics, as a "meta resource" forms a significant part of all machines and equipment imported, which are classified in their final sectoral forms, for example, automobiles, aviation, health equipment, media and broadcasting, defence armaments, etc.

Electronics is characterized by high velocity of technological change. Consequently the life cycle of products is declining. As a result, the value of design and development in the product has increased quite significantly. Given India`s growing strength in chip design and embedded software, the increasing importance of design in product development has potential to make India a favoured destination for ESDM.

Electronic components, which are the basis of an electronic product, are low volume-low weight, cheap and easy to transport across the globe. Moreover, under the Information Technology Agreement-1 (ITA-1) of the World Trade Organization (WTO), which came into force in 1997, a large number of electronic components and products are bound with zero tariffs making trade unrestricted across international borders. Under the Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with various countries, the import of electronics hardware from these countries is allowed either at zero duty or at a duty which is lower than the normal duty rate.

Cabinet Approves National Policy on Information Technology 2012

The Cabinet has recently approved the National Policy on Information Technology 2012. The Policy aims to leverage Information & Communication Technology (ICT) to address the ountry’s economic and developmental challenges. The policy is rooted in the conviction that ICT has the power to transform the lives of people.

ICT and Electronics are contributing significantly to the Indian economy, society and governance. IT is a key driver of the knowledge based global economy. The right policies and investment in infrastructure can strengthen and enhance India’s position as a global IT power-house. Use of IT can transform our economy, enhance equity and lead to improvement in development indices. The Policy envisages the growth of the IT market to USD 300 Billion and creation of additional 10 million employments by 2020.

The thrust areas of the policy include:

1. To increase revenues of IT and ITES (Information Technology Enabled Services) Industry from 100 Billion USD currently to 300 Billion USD by 2020 and expand exports from 69 Billion USD currently to 200 Billion USD by 2020.

2. To gain significant global market-share in emerging technologies and Services.

3. To promote innovation and R&D in cutting edge technologies and development of applications and solutions in areas like localization, location based services, mobile value added services, Cloud Computing, Social Media and Utility models.

4. To encourage adoption of ICTs in key economic and strategic sectors to improve their competitiveness and productivity.

5. To provide fiscal benefits to SMEs and Startups for adoption of IT in value creation

6. To create a pool of 10 million additional skilled manpower in ICT.

7. To make at least one individual in every household e-literate.

8. To provide for mandatory delivery of and affordable access to all public services in electronic mode.

9. To enhance transparency, accountability, efficiency, reliability and decentralization in Government and in particular, in delivery of public services.

10. To leverage ICT for key Social Sector initiatives like Education, Health, Rural Development and Financial Services to promote equity and quality.

11. To make India the global hub for development of language technologies, to encourage and facilitate development of content accessible in all Indian languages and thereby help bridge the digital divide.

12. To enable access of content and ICT applications by differently-abled people to foster inclusive development.

13. To leverage ICT for expanding the workforce and enabling life-long learning.

14. To strengthen the Regulatory and Security Framework for ensuring a Secure and legally compliant Cyberspace ecosystem.

15. To adopt Open standards and promote open source and open technologies

The policy attempts to optimally leverage India’s global edge in ICT to advance national competitiveness in other sectors, particularly those of strategic and economic importance. The Policy will promote an inclusive and equitable society. The Policy is oriented towards use of ICT to consciously promote decentralization and empowerment of citizens.