AP raises incentives for electronic industry

Having all the arrangements in place for the four electronic manufacturing clusters (EMC) in different locations of the state, the Andhra Pradesh government has decided to increase the financial incentives to the units in a bid to make a compelling case for the companies to set up shop here.

The government has issued orders offering 100 per cent tax reimbursement on VAT/CST for a period of 10 years, equivalent to the capital cost incurred by the company on its particular investment. Earlier the reimbursement was limited to 5 years from the date of the commencement of production.

In addition to this the government has now decided to give a 10 per cent capital subsidy on the total investment up to a maximum of Rs 50 million in place of a similar percentage of capital subsidy but only limited to the new capital equipment purchased for the unit.

The government has also enhanced interest rebate to 5 per cent for a period of 7 years subject to a maximum of Rs 1 crore a year. Earlier the interest subsidy was three per cent limited to Rs 5 lakh a year for a period of five years. The government has also enhanced the skill gap training subsidy to Rs 10,000 per employee to the companies from Rs 2,000 announced in the electronics policy earlier this year.

"After coming to know that some of the states in the country had declared a higher level of incentives for the electronics industry, the government has made amendments in the policy to either match or offer a relatively better package than other sttes,"an IT department official told Business Standard on Tuesday.

Government of India has mooted the concept of EMCs while offering a 50 per cent grant for the common infrastructure required by these clusters in addition to certain tax exemptions to the units coming up in these clusters. The Centre hopes to contain a large outgo of foreign exchange by encouraging domestic manufacturing of electronics products as the Indian electronics market is expected to reach $ 400 billion by the year 2020.

According to the IT department officials, the private players have been promoting the two EMCs, one at Sri City in Chittoor district and the other one at Hindupur in Anantapur district. The other two EMCs which will come in Kakinada in East Godavari district and at Pendurty in Visakhapatnam district respectively are being developed by the state government nodal agency AP Industrial Infrastructure Corporation (APIIC). Each EMC will be having a size of around 100 acres and each of these electronics manufacturing parks are expected to get a common infrastructure grant of Rs 50 crore from the Centre.

The state government proposes to bring investments in all categories of electronics including consumer electronics and the defence electronics. "Each cluster will have 7 anchor clients and we will start our search for the anchor companies very soon," the official said.