The Uttar Pradesh government unveiled a new electronics manufacturing policy on Tuesday, where it plans to set up three electronics manufacturing clusters (EMC), three centres of excellence. It also wants to attract investors who can set up semiconductor fabrication units in the state. The policy allows for the creation of a state-level empowered committee which will be chaired by the chief secretary. Projects worth more than Rs 200 crore can be approved by the Cabinet only after this committee recommends it. The government is hoping to attract investments worth Rs 40,000 crore over five years, and create four lakh employment opportunities in Uttar Pradesh.

The 2020 policy replaces a 2017 one, which focused primarily on developing the sector in Noida, Greater Noida and the Yamuna Expressway, by declaring these areas as “Electronic Manufacturing Zones”. The new policy will be applicable across the state, in an attempt to “accelerate the Electronics System Design and Manufacturing (ESDM) ecosystem development”. It focuses on developing the sector in the neglected regions of Purvanchal and Bundelkhand, where the land subsidy offered is double that of what units will get elsewhere in the state.

Highlights of the policy document

  • The policy suggests locations for the three proposed EMCs: an electronic city in Gautum Budh Nagar, a defense electronics manufacturing cluster in Bundelkhand and a medical electronics manufacturing cluster in the Lucknow-Unnao-Kanpur zone.
  • ESDM parks that will be set up across the states will have a minimum area of 25 acres.
  • The central government and “industry associations” together, will bear 75% of the cost of setting up centres of excellence in the state. The remaining 25% will be borne by the UP government.
  • To encourage MSMEs, the government will encourage the development of rental facilities for their work force. It will also encourage development of rental plug-and-play facilities on a PPP model.

Proposed incentives

  • A capital subsidy of 15% of fixed capital investment (maximum Rs 10 crore) will be given when the investment is lower than 200 crore. For investments between Rs 200 crore and Rs 1,000 crore, the subsidy will be 15%, with a maximum of Rs 150 crore, and will be provided to investors in three-yearly investments. When the investment is higher than Rs 1,000 crore, an additional subsidy of 10% will be given.
  • An interest subsidy of 5% will be given to units with investments up to Rs 200 crore on loans obtained from scheduled banks and financial institutions.
  • Cost of filing successful patents will be reimbursed up to Rs 5 lakh.
  • A 25% land subsidy will be provided to units on purchase of land from state agencies in Madhyanchal and Paschimanchal regions. The subsidy is double (50%) if the units are set up in Purvanchal and Bundelkhand.
  • All ESDM units will be eligible for reimbursement of stipend amount given during training to apprentices.
  • For developers, 50 per cent of the costs of developing infrastructure in EMCs will be born by the project implementing agency and state government in equal proportions i.e., 25% each.