AP Electronics Policy

Adopting and promoting of NPE:

Given the comprehensive and holistic nature of the National Policy on Electronics 2012, the Government of AP intends to fully leverage the same and build upon its strengths, as stated below:

  • Electronics Manufacturing Clusters (EMCs): The EMC Scheme intends to create infrastructure highly suited to electronics units by providing a subsidy of 50%. The Government of Andhra Pradesh proposes to promote the development of 20 EMCs across the State, by facilitating the preparation of project proposals by the entrepreneurs and providing single-window clearances.
  • Target investment of Rs 30,000 cr under M-SIPS: Government would make all efforts to attract investments to the tune of Rs 30,000 cr (USD 5 Billion) and facilitate the units to get the 25% Cap Ex subsidy under the M-SIPS scheme of GOI.
  • Preferential Market Access: The policy of GOI on preferential market access for domestically manufactured electronics products shall be implemented in all departments procuring electronics in large quantities. Additional preference shall be given to AP-based domestic manufacturers.
  • Create a Joint Government-Industry committee to market India and attract investments in the country.
  • Create a fund under the management of the Committee comprising representatives of industry bodies and government, with an equal stake to promote design, manufacturing, assembling and innovation and packaging business.

Building Infrastructure

  • Mega Electronics Hub: Government of Andhra Pradesh envisages developing Information Technology and Investment Region (ITIR) in Visakhapatnam. In the ITIR, the Government would reserve two clusters / areas to be solely developed as Electronics Hubs. Visakhapatnam is proposed to be developed as Mega Electronics Hub for the state.
  • Electronic Hardware Park(s): The state Government will facilitate the setting up of the Electronic Hardware Park in Kakinada as announced by the GoI. The park would have the ‘State-of-the-art’ infrastructure with all basic amenities such as internal roads, water, power and other common facilities for the Electronics Units.
  • Common Facilities Centre: Common Facilities Centres would be created in all identified Electronics Hubs.
  • Visakhapatnam-Chennai corridor: Fast movement of inputs, components and finished products is essential for cost-effectiveness in the ESDM sector, which otherwise operates on thin margins. Steps would be taken to enhance the logistics on the Visakhapatnam-Chennai Corridor.
  • PPP for creation of Electronics Hardware Infrastructure: The facilities, in the form of electronics hubs, hardware parks and electronics zones, shall be developed adopting a transparent PPP policy.
  • Renewable Energy: The State Government will encourage units using renewable energy. Units using renewable source of energy with a minimum of 40% of their power requirements coming from renewable sources for their operations and manufacturing will be eligible for additional incentives such as Electricity Duty exemption for 5 years. Sales tax exemption for two additional years shall be available against the Carbon Credits earned on a year-on-year basis.

 Other Critical Infrastructure:

  • Air Connectivity: The process of expansion and modernization of the airports at Visakhapatnam and Tirupati are a foot.
  • Assured Power: Within a span of 5 years, the Government intends to make the State power surplus. As an interim measure, the electronics industry would be exempt from the purview of statutory power cuts.
  • Social Infrastructure: A multi-departmental mechanism would be established to improve the social infrastructure in the cities where ITIR or EMCs are proposed to be developed.

Top-up incentives of GOI

In addition to the incentives by the GOI as per NPE 2012, the Government of Andhra Pradesh shall provide the following additional incentives.

Incentives applicable to all categories of Electronic Hardware Industry:

A1. Non Fiscal Incentives

  • Electronics Industry would be exempted from inspections/certifications under the following Acts and the Rules framed there under and as administered by the Labour Department, barring inspections arising out of specific complaints. The Electronic Industry (units) are permitted to file self-certificates, in the prescribed formats for the following statutes: The Factories Act 1948, The Maternity Benefit Act 1961, The AP Shops & Establishments Act 1988, The Contract Labour (Regulations & Abolition) Act 1970, The Payment of Wages Act, 1936, The Minimum Wages Act 1948, The Employment Exchanges (Compulsory Notification of Vacancies) Act 1959.
  • General permission shall be available on the lines similar to IT/ITES industry for 3-shift operations with women working in the night, subject to the Electronics Units taking the prescribed precautions in respect of safety and security of employees.
  • Electronics Hardware industry is declared as essential service under AP Essential Services Maintenance Act.
  • CCITI: An empowered ‘Consultative Committee on Information Technology Industry (CCITI)’ would be formed with the representatives of Electronics industry and the other stakeholders. The CCITI would administer the incentives in a speedy, time-bound and transparent manner.

A2 Fiscal Incentives

  • Registration & Stamp Duty: Electronics industry shall be eligible for 100% reimbursement of the Stamp Duty, Transfer Duty and Registration Fee paid on sale/ lease deeds on the first transaction and 50% thereof on the second transaction.
  • Power Subsidy:
  1. 50% to Micro, 40% to small and 25% to medium and 10% to large-scale industry limited to Rs. 50 lakhs Power Subsidy on power bills for a period of 5 years from the date of commencement of commercial operations.
  2. Exemption of Electricity Duty: New Electronic Hardware units, after coming into commercial operations will be entitled for 100% exemption on Electricity duty for a period of 5 years.
  • Patent Filing Cost: The cost of filing patents will be reimbursed to the companies having their headquarters in Andhra Pradesh, subject to a limit of Rs. 5 lakh (0.5 Million) per domestic patent awarded and Rs. 10 lakh (1 Million) per international patent awarded.
  • Quality Certification: 50% subsidy on the expenses incurred for quality certification limited to Rs.4 Lakhs (0.4 Million) (Conformity European (CE), China Compulsory Certificate (CCC), UL Certification, ISO, CMM Certification, SA, RU etc.).
  • Cleaner/Greener Production Measures: 25% subsidy on cleaner/ green production measures limited to Rs.10 Lakhs (1 Million).
  • VAT/ CST Reimbursement: 100% Tax reimbursement of VAT / CST, for the new units started after the date of issue of this Policy, for a period of 5 years from the date of commencement of production for products manufactured in AP and sold in AP.
  • Skill Up gradation and Training: 50% reimbursement/ grant of cost involved in skill up gradation and training the local manpower limited to Rs. 2,000 per person.
  • Investment Subsidy: 20% Investment Subsidy limited to Rs.20 lakhs (2 Million) for MSME and additional 5% investment subsidy for Women/SC/ST Entrepreneurs.
  • Interest Rebate: 3% Interest Rebate limited to Rs.5 lakhs (0.5 Million) per year for 5 years
  • Capital Subsidy: 10% subsidy on new capital equipment for technology up gradation limited to Rs.25 lakhs (2.5 Million) as one time availment by the eligible company.
  • Rebate on Land Cost: 25% Rebate on land cost limited to Rs.10 lakhs (1 Million) per acre in Industrial Estates, Industrial Parks, SEZ’s, EMCs

Additional incentives available to Mega Projects:

  • Mega Projects: Mega Projects are the projects or the investment intents with minimum Investment of Rs. 250 crores (2.5 Billion) or the ones that can create an employment of more than 2,000 persons in a span of five years. A special dispensation would be provided to the Mega Projects.
  • Allotment of Government land for construction of own Manufacturing Facility: Allotment of Government land for construction of own manufacturing facility by the Electronic Hardware Industry is made available subject to availability, fulfilment of certain eligibility criteria by the applicant and on payment of land cost and development cost, as determined from time to time by the allotment agencies i.e., APIIC/Urban Development Agencies.

Innovation and Capacity Building

  • Establish COE on Fables Semiconductors: The Government aims setting up a Centre of Excellence in Design of Fables Semiconductors in partnership with the industry and the premier academic institutions in the State.
  • PhDs: The State shall target to reach a level of producing 250 PhDs in Electronics by 2018 under the scheme approved by GoI.
  • Skill Enhancement by MSMEs: Assistance shall be provided to MSMEs with a minimum of 20 employees on its rolls by way of reimbursement of 50% of training fees, subject to a maximum Rs. 10,000 per employee, on obtaining recognized certifications in emerging technologies. The assistance under this category shall be limited to Rs. 1 lakh (0.1 Million) per year per unit.
  • Content Development: Government would support the ‘content development’ for the online courses that would meet the current and future industry demand in association with Industry/ Industry Associations/ Academia.
  • Credits for Online Courses: The Universities will be advised to give credits to the students successfully completing notified online courses.
  • Faculty Up-gradation: A special scheme of faculty up-gradation shall be introduced.
  • The Government would support opening of premier institutes for electronics and hardware in partnership with the top electronics companies and foreign universities.
  • Mandatory Apprenticeship: All educational institutions offering under-graduate courses in software engineering, electronics and computer sciences shall implement a mandatory scheme of internship/apprenticeship in the 4th Year of the course in association with the industry.
  • Provision of Special Fund for Electronic Labs in Schools: This would enable the school to conduct demonstrations and training to the students who envisage interest in electronics and thereby develop the basic electronic knowledge even before they get to the Diploma or Graduation Courses.

This Policy is valid till 2020 unless modified and supersedes the “Andhra Pradesh Electronics Hardware Policy 2012-17. This Policy would be reviewed and updated every year, if required, in consultation with the stakeholders.