Interest subvention, credit guarantee fund part of New Electronics Policy

Govt eyes $400-b turnover by 2025 for local electronics manufacturing

The Cabinet on Tuesday approved the National Electronics Policy (NEP) 2019, which provides incentives to promote domestic manufacturing of electronics with a target turnover of $400 billion by 2025.

NEP 2019 comes with a slew of new incentive schemes including an ‘interest-subvention scheme’, under which the government intends to provide interest subsidy of 4 per cent on loans up to ₹1,000 crore on plant and machinery. For larger loan amounts, the subsidy will be limited to ₹1,000 crore. The Department of Expenditure is being consulted on this issue following completion of stakeholders’ consultation.

Under a new ‘Credit Guarantee Fund Scheme’, the government will create a fund to provide default guarantee to banks up to 75 per cent of the loan amount on plant and machinery for loans up to ₹100 crore. This will eliminate the need for small and new investors to provide third-party collateral, which is required by banks at present.