Karnataka to build electronics clusters to fuel growth

Bangalore, Aug 27 (IANS) Tech-friendly Karnataka plans to build five electronics clusters in the state to attract investments, boost production and generate employment.

"We will build two greenfield electronics clusters at Devanahalli (near the Bangalore airport) and Narsapur (in Kolar district, about 100 km from here) and develop the three electronic systems design and manufacturing (ESDM) sectors at the electronics city and Peenya in Bangalore and Mysore into clusters," state IT secretary I.S.N. Prasad told IANS.

To be built under the public-private partnership (PPP) mode, the clusters will facilitate setting up of new ESDM units and expand the existing units in the brownfield.

"The proposal for the Devanahalli cluster has been sent to the union ministry concerned for clearance and funds, as the project cost of Rs.100 crore has to be equally shared by the state and the central governments," Prasad said.

The proposed clusters will have common testing and certification facilities for ESDM units and MSME (micro, small and medium enterprise) units.

"We have set up a core committee on ICT & Electronics Hardware to scale up the ESDM sector that is projected to grow across the country nearly 10 times to $400 billion by 2020 from $45 billion in 2012 and reduce dependency on imports, which account for 85 percent of the consumption," Prasad asserted.

For instance, of the 12 million computers sold in the previous fiscal (2012-13), 85 percent were imported, while domestic firms had to import 95 percent of components to manufacture a range of electronics products for the consumer and industrial segments.

In the absence of a strong production base, electronics products valued at $30 billion were imported last fiscal.

"Unless the domestic ESDM sector rapidly increases production with double-digit growth, import of electronics goods will increase to $42 billon by 2015 from $30 billion in 2012," Prasad said.

The state government is planning to set up Rs.500-crore seed fund for the ESDM sector, offer incentives and innovation support for IP (intellectual property) creation under a new policy formulated on the recommendations of the Karnataka ICT group, headed jointly by Manipal Global Education chairman and former Infosys director T.V Mohandas Pai and former STPI (Software Technology Parks of India) director B.V. Naidu.

"The group has recommended preferential market access to the ESDM sector on procurement of electronics products by the state government, which in turn will benefit the small and medium enterprises (SMEs)," Prasad said.

The state government had June 17 signed an agreement with the Israeli Industry Centre for R&D (Matimop) to initiate collaborative research and development projects with financial support through the Karnataka-Israel Industrial R&D programme.

"Even as a small country with about 200,000 hi-tech engineers, Israel has been able to create R&D driven electronics and telecom firms, exporting products worth billions of dollars," Prasad noted.

Admitting that domestic production of electronics products would help reduce the trade imbalance, the secretary said the state government was committed to accelerating the growth of the ESDM sector to replicate the success in the software services sector.

"As a leader in chip designing and R&D, we have an ecosystem to nurture the growth of ICT in Bangalore, which has 85 chip design firms and 400 R&D centres in IT, science & technology, defence and space. With 45,000 students graduating every year from about 200 engineering colleges across the state, we have the human capital for absorption by the industry," Prasad added.

(Fakir Balaji can be contacted at fakir.b@ians.in)

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