Andhra Pradesh raises capital subsidy for electronic industry

Firms setting up manufacturing units can now get back as much as 50% of capital investment after commercial operations

A company setting up an electronics manufacturing unit in Andhra Pradesh can now get back as much as 50 percent of the capital investment it has made on the unit after its commercial operations.

Making the fiscal incentives an ever bigger lure to attract companies in this sector, Andhra Pradesh government has recently enhanced the subsidy on capital investment to 30 percent with a cap of Rs 250 crore. Earlier the capital subsidy in AP was 10 percent, that too limited to a maximum of Rs 5 crore.

This comes on top of 20 percent capital subsidy being offered by Government of India, which had recently extended the eligibility to 15 new electronic products, including consumer electronics and Internet of Things(IoT) products.

 

As the subsidy offered by the two governments on this front alone will add upto 50 percent of the capital investment made by a company, the state government believes more investments would flow into the state in electronics industry.

After Taiwanese electronics manufacturing company Foxconn had established its mobile assembly plant in Sricity, the government has made sustained efforts to bring more mobile and electronics manufacturing companies into this region by offering land and other incentives. The increase in capital subsidy will further boost these efforts, according to AP government officials.

The move comes at a time when Foxconn was believed to be looking for a second location within AP for new catchment areas for manpower among other reasons, according to sources.

A senior industry department official informed that currently Lava and Celkon Mobile companies were in the process of establishing their units while Micromax too was expected to set up shop after it completing its plant in Hyderabad.

Recently AP government has approved an investment proposal of Gurgaon-based Dixion Technologies Limited, which is planning to set up a manufacturing plant near Sricity at an investment of Rs 150 crore. The company would like to start operations as early as by March next year in an already built facility offered by the government, the official said

Apart from increasing the capital subsidy, the government has also removed cap on power subsidy in the latest round of amendment to the existing policy.

Earlier the companies were given power subsidy ranging from 10-50 percent on power charges limiting to Rs 50 lakhs over a period of 5 years. As per the new orders, all mega projects(units that hire 1000 or more employees) will avail a subsidy of 25 percent, and other categories a subsidy 20 per cent on power charges for a period of 5 years to what ever extent they may consume the power.