The Department of Electronics & Information Technology (DeitY) has appointed CanBank Venture Capital Fund as fund manager to manage the Government’s Electronics Development Fund (EDF) and is inviting participation from seed, angel and daughter funds. The government aims to achieve ‘net zero’ imports by 2020, while the demand for electronics is estimated to be $400 billion by 2020, according to the press note.
Dr Ajay Kumar, Additional Secretary of DeitY said that EDF’s goal is to reduce the country’s ‘ballooning’ import bill on increasing demand for electronic devices. The EDF will participate in ‘daughter funds’ to provide risk capital to companies developing new technologies in electronics, nano-electronics and IT. It will take minority participation in seed, angel and venture funds in these domains, and invite private/public funds to participate. The EDF will support Indian and foreign funds registered in India.
Kumar said that EDF’s capital could be deployed across Electronic System Design & Manufacturing (ESDM) ecosystem, including fabless semiconductors, research & development and materials technology for electronic devices.
In December 2014, we’d reported that DeitY was planning to set up the EDF, a Rs 10,000 crore innovation and development fund for the electronics and IT sectors. DeitY would rope in existing venture capitalists for selecting startups for funding, in each of which it would invest up to a maximum of 20%. DeitY mentioned that electronics import at that time cost the government $100 billion, hence the need to increase domestic production, increase the Intellectual Property Rights created in the country, and aid developmental efforts. This was emphasized in Digital India week which took place in July this year.
Focus on products and tech startups: The EDF fund recommended setting aside Rs 250 crores to support technology focused startups in products and technology space and Rs 100 crore for providing grants for collaborative research program between industry and academia in areas related to semiconductors and electronics, in addition to subsidising a venture fund of around $50 million for startups to undertake R&D and product development.
Electronics manufacturing in India: The Indian government has been encouraging domestic companies to start manufacturing electronics goods within the country instead of importing them and had approved a National Policy on Electronics. The National Manufacturing Competitiveness Council (NMCC) had also proposed the creation of a $1 billion fund to encourage telecom equipment manufacturing in India. The Cabinet had approved the setting up of two semiconductor wafer fabrication units at a cost of Rs 63,412 crore in India, in February last year. Since then, various smartphone manufacturers have said they will start manufacturing in India or have already started doing so. Read more about it here.