Govt okays Electronics Development Fund
To boost local manufacturing, the Cabinet has approved the communications ministry’s policy to set up an Electronics Development Fund (EDF), which will invest in electronics and information technology (IT) entrepreneurial ventures.
The policy frame for the EDF is aimed to resolve unavailability of adequate risk capital through venture funds for research and development (R&D), innovation and intellectual property creation in the companies operating in four areas — electronic system and design, manufacturing, nanoelectronics, and IT, according to a senior communications ministry official.
The corpus of the fund, which has been left open ended, will be managed by Small Industries Development Bank of India (SIDBI) or similar financial institution to fund startups and other ventures that promotes the EDF policy.
“There is an urgent need for manufacturing electronics and telecom products (in India), especially those having security implications,” a source in communications ministry said.
A National Policy on Electronics (NPE) had envisaged that the EDF will be a ‘fund of funds’ to participate in ‘daughter of funds’ (angel funds and venture funds). The plan is to leverage these funds to acquire foreign companies, so as to shift the manufacturing of products currently imported in large volumes into the country.
“The fund is proposed to be managed professionally and would be accessible to both the government and the private sector,” the source added.
Communications minister Ravi Shankar Prasad has been highlighting the need to promote domestic electronics manufacturing. It is important since the current domestic demand for electronics in India is about $45 billion and is expected to grow at a compounded annual growth rate (CAGR) of 22% for the period 2009-2020, according to a note by the department of electronics. With current growth rate, the production of electronics hardware in the country is likely to grow to $42 billion by the end of 2014 and $105 billion by 2020, as per the note.