Govt to fund start-ups in electronics space

New Delhi: The Government will soon unveil guidelines for financially supporting start-ups in the field of electronics. It may chip in with 15-25 per cent of the total investment for such projects through fund managers including banks or any large IT company.

“This will be the first time in the country when we will have a system by which the Government can effectively stimulate the private sector in R&D work, because we have one of the lowest intensities of R&D relative to the GDP (less than 1 per cent),” a senior official at the Department of Electronics and Information Technology (DeitY) told Business Line.

Mission mode
Once the guidelines are finalised, the Government will also fix its return on investment (at around 5 per cent). A high-level committee under the chairmanship of R. Chidambaram, Principal Scientific Adviser to the Government, is working on preparing the guidelines.

This will be part of the National Electronics Mission under the National Policy on Electronics 2012, and the investments will be routed through the Government’s ‘Electronic Development Fund’ scheme, which aims to invest $2 billion (around Rs 12,000 crore) by 2020, the official said.

“We expect additional mobilisation of around Rs 30,000 crore — to be raised from the industry by 2020. The industry is nascent right now, so we expect it to start slowly and invest around Rs 50 crore or Rs 100 crore to start with,” he said.

There are many small companies in India which are on the verge of shutting down . The proposed initiative will help such companies survive , he said.

The official said the Government is also open to working with Nasscom to support the start-ups.

He said even though institutions such as the Centre for Development of Advanced Computing , and the IITs are doing their bit it may not be sufficient.

“We need to plant thousands of trees; out of which only a few may survive, but one or two that do survive will give sufficient returns; and that is what venture capitalists do,” he said.

Under the NPE, the Government is hoping the electronics sector will achieve a turnover of around $400 billion by 2020. This involves investment of around $100 billion. It will also help employ around 28 million people by 2020.

The policy includes achieving a turnover of $55 billion for the chip design and embedded software industry, and $80 billion of exports in the sector. Over 200 electronic manufacturing clusters are also proposed to be set up.