India Plans To Invest $2 Billion in Electronic Startups by 2020

The Indian Government is soon planning to support startups operating in the electronics space by funding 15-25% of their total investment, according to a report. It plans to do the funding through fund managers, banks and large IT companies.

Silicon ChipThe Government, through a committee, is currently finalising the guidelines and plans to fix the return on investment (ROI) at 5%. R Chidambaram,the Principal Scientific Adviser to the Government, is heading the committee forming the guidelines, The Hindu Business Line reported.

This project is a part of the National Electronics Mission under the National Policy on Electronics 2102. The Government is planning to invest around $2 billion, by 2020, through the Electronic Development Fund scheme, an official told Business Line.

The Indian Government has been trying to support companies into fabrication and R&D in the electronics space off late. In 2012 the Government had come up with the National Policy On Electronics (NPOE)  in order to fill the gap between domestic demand and production of electronic goods. In the policy it was was said that there would be special incentive packages for the companies to start semiconductor wafer fabrication plants in India.

As a part of this new scheme, the Government will provide up to $1.8 bn in incentives to companies involved in production of electronics products and components in India.The Government will provide a subsidy of 20% on capital expenditure incurred to companies setting up production units within Special Economic Zones and 25% to units set up outside these zones.

Earlier this month we had reported that the Government’s $ 1 billion investment fund for innovation is nearing its first close with a total commitment of Rs 475 cr and a pipeline of over 300 target investments. The Government plans to invest 20% in the fund with a life of 9 years (extendable by up to 2 years) with a target internal rate of return of 12% before taxes and management charges.

Demand for electronics hardware in the country is expected to increase from $45 bn in 2009 to $400 bn by 2020, and with initiatives like these the Government wants to reduce its import bill on electronics goods. With all the funding initiatives by the Government, will we see an Indian electronic devices in the market soon? Hopefully yes.

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