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Can Gujarat’s New Electronic Policy Influence The Whole Nation?

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Gujarat Government has just announced a new Electronic Policy for the period 2014-2019, which aims to establish the state as the number one destination for electronic manufacturers.

Taking cues from Prime Minister’s Make in India campaign which was launched in September this year, this policy draft aims to provide focused attention and importance to the Electronics System Design & Manufacturing (ESDM) industry in the state.

As per estimates, the new policies related with Electronics manufacturing can generate investments upto $6 billion (Rs 36,000 crore) and provide employment to more than 5 lakh people.

Gujarat Electronic Policy

The vision of this Electronic Policy is: “To establish a Self – Reliant Electronics System Design and Manufacturing Industry with the requisite ecosystem in Gujarat towards Sustainable Development and Inclusive Growth to cater to the domestic needs and gain a foothold in the international market thereby contributing to the overall economy and prosperity of the State and the Nation”

Some of the important features of this policy draft:

  • 100% exemption on stamp duty and registration fees for first time land purchase for ESDM units
  • 100% refund for Central Service Tax
  • 100% exemption on Electricity Duty for 5 years
  • 90% exemption on VAT for new investments
  • 25% of the overall costs related with creation of Electronics Manufacturing Clusters in the state, will be borne by the state government
  • Low interest loan to manufacturers of electronic systems (2-7% max)
  • Power to be billed at Re 1 per unit for the next 5 years
  • Special offers and packages for those units which employ more than 500 people with investments of over Rs 250 crore
  • ‘Single Window Clearance Committee’ will grant clearances and approvals, with 24*7 helpline
  • Gujarat Electronics Mission to be established, which will ideate plans related with establishing Electronics Manufacturing Clusters all over the states, and set up investment offices in foreign countries to attract more investments
  • Provision of internships for UG and PG students from the state into these units
  • Establishing a free trade and warehousing zone in every city for supplying raw materials and other components easily
  • Provision to establish a body to protect Intellectual Property of Indian inventors and scientists

Why Just Gujarat & Not Whole India?

As per National Policy on Electronics – 2012 survey, the demand of electronics goods inside the country will swell the market to $400 billion (Rs 24 lakh crore) by 2020. Going by the current trends and projections of domestic electronics manufacturing, India can only produce electronic goods worth $100 billion by 2020, thereby creating a huge demand-supply gap of $300 billion.

And the only solution lies in importing the goods from other countries.

Considering that India is itself a huge market, which is growing at a breakneck speed, why doesn’t a similar entrepreneur friendly electronic policy is introduced nation-wide? Right now, every state has its own set of rules governing manufacturing, with old rules dating back to the English rule.

The policy framework for manufacturing in states like UP and Orissa makes it almost impossible for the small player to initiate any new project without either giving huge bribes or by using a political connection. The rules date back to hundreds of years and are actually irrelevant compared to the present context of IT and Electronics.

Gujarat government has done a commendable job here, clearly outlining the policies which should be actually implemented pan-India.

When the intentions are right, and vision clear, rules and regulations can be of course bent and broken to help the entrepreneur who is putting everything at stake to achieve the impossible.

You can find the complete policy draft announced by the Gujarat Government here.

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