Andhra Pradesh raises capital subsidy to 30% on electronic manufacturing units

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In a great step to lure Electronic manufacturers in setting up manufacturing units in Andhra Pradesh, the state government will now provide 30% subsidy on the capital investment it has made on the unit after its commercial operations.

The State government has recently heightened the grant on capital investment to 30 percent with a cap of Rs 250 crore. Earlier the capital subsidy in Andhra 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.

The state government is optimistic about more investments to make an inflow into the state in the electronics industry, as the subsidy offered by the two governments together adds upto 50 percent of the capital investment made by a company,

The government has made continued exertions to bring more mobile and electronics manufacturing companies into the state by offering land and other incentives. The increase in capital subsidy will further boost these efforts, according to AP government officials.

Foxconn, the electronics manufacturing company from Taiwan, have already established its mobile assembly plant in Sricity.

According to sources, the move on subsidy 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,

Currently, mobile companies like Lava and Celkon are in the process of establishing units, while Micromax too is expected to set up shop after it completing its plant in Hyderabad, a senior industry department official said.

AP government has recently approved a 150 crore investment proposal of setting up a manufacturing plant near Sricity, by Gurgaon-based Dixion Technologies Limited. The company is likely to begin operations as early as by March 2017 in an already built facility offered by the government, the official said

Apart from increasing the capital subsidy, the government has also removed the 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 whatever extent they may consume the power.