Financial, labour law sops in TN's new electronics manufacturing policy

The policy offers various subsidies - capital subsidy of 10-30 per cent (based on the investment, plant location and employment potential), for land lease cost, interest, patent application cost and employee training subsidy (only for the state's native residents).

It also offers electronics manufacturing industries exemption from stamp duty and electricity tax.

The government said the new policy aims to increase the level of value addition done in the state in sectors like mobile handsets, light emitting diode (LED) products, fabless chip design, printed circuit boards, solar photovoltaic cells, medical electronics and automotive electronics.

Investors may choose to avail incentives under any one policy of the state government including this policy or the extant Industrial Policy or any other applicable state government policy.

All incentives offered by the Tamil Nadu government to units in the electronics manufacturing industry shall be in addition to the incentives offered by the Centre to those units.

Investments made from January 1, 2020 will be considered eligible for availing incentives.

The policy classifies the electronics manufacturing projects as micro, small and medium enterprises (MSME), large (new or expansion, with Rs 200-500 crore investment and over 500 persons employment range) and mega (new or expansion with the investment of over Rs 500 crore and employment range over 2,000 persons).

In addition to the incentives listed in the policy, the state government may, in its discretion, approve higher incentives/concessions and relax the conditions for deserving projects giving due weightage to investment, employment, value addition and potential for attracting further investment through vendors and ancillaries.

The Tamil Nadu government also said it will formulate a special package of incentives for Electronic System Design Manufacturing (ESDM) units in the MSME sector.

The new policy will also encourage development of private ESDM parks with common infrastructure, amenities and waste handling facilities.

For electronics manufacturing clusters (EMC) apart from the incentives offered by the central government, the Tamil Nadu government offers its own incentives.

According to the policy, the state government proposes to promote the development of EMCs across the state by 2023.

Some of the proposed EMCs include a greenfield EMC in Hosur, and in the Chennai/Tiruvallur/Kancheepuram region; brownfield EMCs in Sriperumbudur and Oragadam; and the ELCINA industrial park as Brownfield EMC in Coimbatore region.

The EMCs shall provide internal and external infrastructure, inclusive of multimodal logistics and shared testing and training facilities.

According to the policy, the state government, through various organisations, will promote industrial housing projects near existing and new ESDM hubs.

It will also promote bespoke industrial housing projects for the electronics industry, based on the demand and requirements given by a specific company or group of companies.

The government will use the Tamil Nadu Shelter Fund and funds from the Central government for industrial housing for this project.

In order to develop a circular economy, private investments in development of electronic repair parks with facilities for electronic waste management shall be encouraged through viability gap funding/revenue sharing mechanisms.

For the promotion of the semiconductor fabrication industry (FAB) industry, a special task force will be formed to create an appropriate eco system and special incentives will be offered for investors in this sector, the policy said.

The policy has exempted ESDM companies from various laws and will allow self-certification and third-party verification for labour related clearances and approvals under labour laws.

The flexibility in working hours, working in three shifts and employment in night shifts may be allowed for women employees, provided all necessary security arrangement, creche facilities for children, facilities of restroom and safe transportation are arranged; the employers have to ensure that night shift work may be carried out under the supervision of women supervisors and ensure the presence of women security officers.