Karnataka, TN, UP, Maharashtra frontrunners for ESDM ecosystem: Industry report

Karnataka, Tamil Nadu, UP, and Maharashtra are the most proactive states in terms of creating a conducive environment for ESDM investments, according to the State Preparedness Index for the electronics systems design and manufacturing (ESDM), released by chip industry body India Electronics and Semiconductor Association (IESA) on Thursday in Bengaluru. 

According to IESA, the objective behind the index is to help states identify their strengths and which areas they need to work on to become more attractive to investors.

For the index, IESA identified five key parameters and 20 sub-parameters under each of them. The key parameters include current and future potential in ESDM, infrastructure and geographical advantage, policies and governance, business climate, and human capital. 

After evaluating the states on these parameters and sub-parameters, IESA classified them into three categories -- nascent, emerging, and developing. A fourth category called mature & well-established was also identified but none of the Indian states qualify for that yet. Mature and well-established regions include global manufacturing and design hubs such as Taipei, Haifa, Osaka, and Singapore.

The index identifies Haryana, Telangana, Gujarat, Karnataka, Tamil Nadu, UP, and Maharashtra as developing states for ESDM. Within this category, Haryana and Telangana have been further clubbed under a sub-category called accommodative as they are taking proactive ESDM measures, while Gujarat, Karnataka, Maharashtra, Tamil Nadu, and Uttar Pradesh are in an accelerating stage, which means that they are on track to achieve rapid progress in terms of the attacking initiatives for ESDM. 

According to IESA, these states are more proactive than others. They are in dialogue with the industry, eyeing international investments, participating in trade shows, and creating a conducive environment for investment into ESDM.

Madhya Pradesh, Rajasthan, Kerala, Uttarakhand, Punjab, and West Bengal are in the nascent stage as they were found to be passive and not doing much to attract ESDM investments. 

Further, states such as Bihar, Goa, and Jharkhand were placed at the bottom of the index as they have a lot of catching up to do. 

IESA clarified that the index is not a ranking of which states are better than others. It only indicates that some states have better infrastructure, while some states have more proactive future policies. It can help investors decide where to put an electronic manufacturing service (EMS), component manufacturing, or design house. 

India is positioning itself as the next global hub for ESDM and is encouraging the electronics and semiconductor industry to build key components including chipsets in India. As part of it, the government of India has announced production-linked incentive (PLI) schemes for several industries including smartphones, PCs, semiconductors, and IT and telecom equipment. Under these schemes, manufacturers are given incentives like tax rebates for manufacturing and exporting a certain amount of products from India.