Digital India, according to Prasad, has been designed to empower Indians, to bridge the digital divide, to create technology platforms.
Calling Electronics Development Fund (EDF) first of its kind initiative by the government of India, Ravi Shankar Prasad, Union Minister for Communications & Information Technology, said it was one of the key steps taken towards a digital transformation of the country.
“An ecosystem of change is what we are experiencing in India. However, the digital profile of India will remain incomplete unless we address the need of electronics manufacturing. And therefore, I see this initiative as a part of the larger goal of transformational exercise we are engaged in,” said Prasad while launching the Rs 2,200 crore Electronics Development Fund (EDF) on the sidelines of Make In India week in Mumbai on Monday.
Digital India, according to Prasad, has been designed to empower Indians, to bridge the digital divide, to create technology platforms. While much of it is happening on its own, the government will have to play the role of an accelerator. “India is today home to the biggest footprint of Facebook and Google after the United States. The way smartphone is getting consumed in India, very soon, we will overtake even USA and China,” he said.
Prasad foresees electronics in five sectors – such as consumer, communications, defence, auto and medical. “In fact, I have decided that medical electronics must be segregated from general pharma electronics and given all the incentives that electronics manufacturers are entitled for. When the whole electronics development architecture was being worked out, one of my clear instructions was that while the government must surely contribute, we should also let the instincts of a venture capitalist, the angel fund or a daughter fund be allowed to determine where, how much and how to invest,” he said.
Elaborating on the overall electronics industry, Prasad said that the total digital economy presents a very exciting picture of close to $1 trillion. “About $400 billion would be electronics manufacturing products, about $350 billion would be ITES including e-commerce and $250 billion would be communications. All this would prosper, develop and get speeded up, upon the benchmark of electronics products. Therefore, it is going to be a win-win for me. And knowing India as I do, I see enormous scope and potential for this Electronics Development Fund,” he said, adding apart from the routine sectors, the focus of investments should also be on chip designing and cyber security related ventures / start-ups.
The EDF initiative is part of the Electronics Development Fund Policy launched by Prime Minister Narendra Modi during the inauguration of Digital India Week in July last year. The fund is housed by Canbank Venture Capital Fund Pvt Ltd (CVCFL) and is an initiative of the IT Department to act as a ‘Fund of Funds’ to participate in ‘Daughter Funds’. These funds will in turn provide risk capital to companies developing new technologies in the area of electronics, nano-electronics and Information Technology (IT). The target beneficiaries of the EDF will be daughter funds (set up to achieve the objectives of the EDF policy) registered in India and abiding by the relevant rules and regulations including the Securities and Exchange Board of India (Sebi) regulations on venture funds.
The launch also saw funds being allocated by the EDF in the form of letter of commitments (ranging between Rs 10 crore and Rs 40 crore) to Karnataka Information Technology Venture Capital Fund (KITVEN Fund), Exfinity Venture Partners LLP, Forum Synergies and Endiya Partners.
According to Rajiv Bansal, joint secretary, Ministry of Communications and Information Technology, government of India, the corpus of a daughter fund will be determined by market requirements and the capacity of its fund manager to cater to the requirements of the fund. “The supported daughter funds will promote innovation, research and development (R&D) and product development within the country in the specified fields of electronics, nano-electronics and IT. They will also support acquisition of foreign companies and technologies for products imported in India in large volume. The core focus of the daughter funds would be to develop domestic design capabilities. The daughter funds supported will create a resource pool of intellectual property (IP) within the country in the specified fields,” said Bansal at the EDF launch.
The digital India initiatives, Prasad said, are important for the nation because India today plus information technology will lead to India tomorrow (IT + IT = IT). “The sheer transformational pull of information technology, all its ambience, is truly shaking up India in to a very drastic direction. What we are doing now is basically creating an ambience of an enabling atmosphere where you can perform. Digital India is more for the poor and the underprivileged. And today, with smartphones in their hands, people are seeking new business opportunities that were not possible earlier. India presents an enormous ecosystem which is evident from the way e-commerce has grown in the country.