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Bengaluru, NFAPost: Giving another boost to its ambition to be the capital of electronic system design and manufacturing (ESDM) sector of India, Karnataka government has come up with ‘Scheme of Special Incentives for ESDM Sector’ which proposes to waive off land registration and conversion fee for the sector along with other bonanzas.

The state policy announced by Deputy Chief Minister C N Ashwath Narayan is prepared on the lines of Ministry of Electronics and Information Technology (MEITY) National Policy on Electronics 2019 (NPE 2019) which proposes to increase the domestic production of electronics and propel the growth of the ESDM industry to encourage domestic manufacturing and exports in the ESDM value chain.

The central government has come out with three schemes to boost the ESDM sector in the country namely, Scheme for Promotion of manufacturing of Electronics Components and Semiconductors (SPECS), Production Linked Incentive (PLI) Scheme and Electronics Manufacturing Clusters 2.0.

Electronic manufacturing

Commenting on the policy, Deputy Chief Minister C N Ashwath Narayan said Karnataka government’s Scheme of Special Incentives for ESDM Sector will encourage and attract electronic manufacturing units that are seeking opportunities to establish thier operation.

“We want to help them in their operations through new investment, expansion, modernisation, relocation or any manner whatsoever. We are giving them capital investment subsidy of 25% on land and 20% on plant and machinery,” he said.

Deputy Chief Minister C N Ashwath Narayan also pointed out that ESDM sector investment on land will have 100% reimbursement of stamp duty and registration charges along with zero land conversion fee.

“Besides exemption from electricity duty for 5 years, ESDM investors can avail power tariff reimbursement of Re 1 per unit for 5 years from the month of commencement of commercial production. The state government also came up with production linked incentives for new investment and expansion in the form of 1% of annual turnover for a period of 5 years from the first year of commercial operation,” said Deputy Chief Minister C N Ashwath Narayan.

Karnataka Government Proposal As Per The Scheme Of Special Incentives For ESDM Sector

Sl. No.Incentive HeadQuantum Proposed
A.  Manufacturing & Assembly Units
1Capital Investment Subsidy25% on Land 20% on Plant & Machinery
2Reimbursement of Stamp Duty and Registration Charges100%
3Reimbursement of Land Conversion Fee100%
4Power tariff reimbursementINR 1.00 per unit for 5 years from the month of commencement of commercial production
5Exemption from Electricity Duty100% for 5 years from the month of commencement of commercial production
6Production Linked Incentive (for new investments and expansions)1.00% of annual turnover for a period of 5 years, starting from the first year of commercial operations
  • The 25% Capital Investment Subsidy on land will be eligible to only those industries who are setting it up in areas other than Bengaluru Urban and Bengaluru Rural districts.
    • Capital Investment Subsidy on Land will be provided for land area up to and not exceeding 50 acres and on actual procurement cost if procured from KIADB or any other agencies of Government of Karnataka. The subsidy for land procured from other sources will be as per the guidance value of land at the time of procurement.
    • The 20% Capital Investment Subsidy on Plant & Machinery will include expenditure on used / second hand / refurbished plant, machinery, and equipment (including for associated utilities and R&D), whether imported or procured domestically, not exceeding 20% of the total eligible plant, machinery and equipment (including for associated utilities and R&D)
    • Production Linked Incentive will be based on annual sales turnover (includes sales within the state, inter-state and exports), as evidenced by annual audited accounts/audited balance sheets, in proportion detailed below
    • Incentives will be provided only to new investments or for capacity expansion. It will not be applicable for existing companies
    • Total quantum of incentives sanctioned to a Manufacturing / Assembly unit under this package shall not exceed 100% of the value of fixed assets created by the unit
  • “Scheme of Special Incentives for ESDM Sector” will be applicable for new investments or investments in expansion of existing units for a period of 5 years from the date of announcement of the Scheme.
  • “Scheme of Special Incentives for ESDM Sector” can be availed in addition to incentives and subsidies provided under any of the policies of Government of India. Industries availing this package of incentives cannot avail incentives under any of the other policies of Government of Karnataka.
  • Products/activities eligible for Incentives under Special Incentives Scheme for ESDM Sector are:

i. Manufacturing and or design of electronics products
ii. Semiconductor manufacturing and design
iii. Electronic Manufacturing Services
iv. Solar Cells manufacturing
v. LED
vi. Any other electronics verticals / products covered by the National Policy on Electronics

  • These incentives are over and above the schemes notified by GOI encompassing the entire range of products & activities under ESDM – such as Electronic Manufacturing Services (EMS), Consumer Electronics, etc and not limited to only certain products as in GOI schemes. Under the special incentive scheme, we are also subsidizing the land procurement.
  • An investment of over INR 5,000 crore is expected to the State through this Scheme, with a potential to generate 43,000 direct employment over next 5 years.
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