Introduction
The Department of Science and Technology, Government of Gujarat has announced the Gujarat Electronics Policy, 2022-2028 on 28 October 2022 (“Policy”), aiming to build a robust electronics manufacturing ecosystem in the State of Gujarat. The Policy aims at opening new avenues for manufacturing and investments in the electronics manufacturing sector in Gujarat, by driving growth through incentives (fiscal and non-fiscal), process optimization and facilitating adoption of latest technologies in the electronics manufacturing sector. Operative period of the Policy is until 31 March 2028 (“Operative Period”).
Eligibility criteria to avail benefits under the Policy
The Policy is applicable to: (i) any new unit setting up its operations in Gujarat for manufacturing of identified goods (list provided in Annexure I of the Policy), and/ or (ii) any existing units undertaking expansion/ diversification of production of identified goods (“Eligible Units”). Eligible Units should be engaged in the business of manufacturing electronic products or intermediates, providing electronic manufacturing services, or involved in any other electronic verticals/ products covered by the National Policy on Electronics, or any other policies issued by the Government of India from time to time.
Eligible Units are required to obtain Medium Small Micro Enterprise (“MSME”)/ Udyam registration or Small-Scale Industry registration from the Government of Gujarat or Industrial Entrepreneur Memorandum with Government of India. Incentives under the Policy will be available to entities who have applied for assistance on or before the Operative Period and commenced operation on or before 31 March 2031.
Incentives under the Policy
The Policy provides the following (i) fiscal incentives, (ii) non-fiscal incentives, and (iii) other support to the Eligible Units:
a. Fiscal Incentives:
i. Capital Assistance: Up to 20% of eligible capital expenditure, subject to ceiling of INR 2 billion, for capital expenditure incurred up to INR 1,0 billion. For capital expenditure above INR 1,0 billion, the capital assistance will be up to 15%.
ii. Interest assistance on term loan: Interest aid up to 7% or actual interest, whichever is less, on term loans for a period of 5 years, with a ceiling limit of INR 100 million per annum. The Policy stipulates that the Eligible Unit has to bear a minimum of 2% interest on such term loan.
iii. Reimbursement of stamp duty and registration fees: One time reimbursement of 100% stamp duty and registration fees paid to the government for lease/ sale/ transfer of land.
iv. Power tariff and Electricity duty: Power tariff subsidy of Re. 1 per unit for 5 years and exemption from payment of electricity duty (as applicable) under the Gujarat Electricity Duty Act, 1958. Eligible Units undertaking expansion/ diversification under the Policy will be entitled for this incentive only for the additional power consumed attributable to such expansion/ diversification.
v. Logistics Subsidy: (a) Subsidy of up to 25% on freight charges for 5 years, up to INR 50 million per annum, and (b) one-time 50% reimbursement of the cost incurred on relocating manufacturing operations from outside India to Gujarat, up to a ceiling of INR 50 million.
vi. Atmanirbhar Gujarat Rojgar Sahay (AGRS): Reimbursement (100% for female employees and 75% for male employees) of employer’s statutory contribution for Employees’ Provident Fund for employees working in Gujarat for a period of 5 years, subject to a ceiling of 12% contribution per employee. Existing units can claim this incentive only for the incremental employees post undertaking expansion under the Policy.
b. Non-fiscal incentives (for investor facilitation):
i. Self-certification: Facilitation for undertaking compliances under: (i) Factories Act,1948, (ii) Maternity Benefit Act, 1961, (iii) Gujarat Shops and Establishment (Regulation of Employment and Conditions of Service) Act, 1970, (iv) Contract Labour (Regulations and Abolition) Act, 1970, (v) Minimum Wages Act, 1948, and (vi) Payment of Wages Act, 1936.
ii. Single window for fast-track approvals: Setting up a common digital platform for the application process and appointing a dedicated resource to streamline the application approval process.
iii. Land identification and allotment: Facilitation in identifying industrial zones, land allotment process and setting up a digital land bank.
iv. Regulatory approvals: Assistance in obtaining various regulatory approvals by assigning a dedicated co-ordination desk within Gujarat State Electronics Mission.
v. Uninterrupted utilities supply: Uninterrupted supply of power, water, gas, and other industrial infrastructure.
vi.Common dormitories for housing industrial workforce: Common industrial dormitories on need basis in various Gujarat Electronics Manufacturing (“GEM”) clusters for the industrial workforce.
vii. Promotion of Gujarat electronics sector: Active promotion through various conclaves, conferences, and trade fairs to ensure maximum outreach of this Policy.
c. Other support:
The Government of Gujarat is committed to build a strong foundation for development of electronics ecosystem in Gujarat. Additional support will be provided through establishing (i) GEM clusters, (ii) Electronics - Common Facilities Centers, (iii) Gujarat Electronics Training Cells, (iv) Electronics Industrial Training Institutes, (v) Common R&D facilities, and (vi) Research and Innovation Labs, etc.
Our Thoughts
The Department of Science and Technology, Government of Gujarat is taking steps to encourage the growth and development of new and emerging technology. Apart from the Policy, this department has also recently announced various other policies, viz – Gujarat Semiconductor Policy 2022-27, Biotechnology Policy 2022-27, and Telecon Infrastructure Policy 2022-27, etc. Considering the larger objective of promoting ‘Make in India’ through the various Production Linked Incentive Scheme including for electronics manufacturing, incentives under the Policy should bolster the aim of making India a global hub for this sector.
Authors: Deni Shah and Yogesh Chhajer
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