By Manu Sharma
Bangalore, Feb 03, 2010 1601 hrs IST

With over 80% of the chip design done in Bangalore, from more than 100 companies, the creation of the semiconductor policy is expected to benefit Karnataka and serve as a guide for other States to emulate. The state expects to earn Rs. 120 billion in revenue from the electronic system design and manufacturing industry by 2020.

Announcing the policy at the ISA Vision Summit 2010, B. S. Yeddyurappa, chief minister, Karnataka said, "For the first time we have drafted such a policy and we shall ensure that its objectives are met. It will be a role model for other states to follow. The focus will now not only be Bangalore but also Tier-II and Tier-III cities like Hubli-Dharwad, Belgaum, Gulbarga, Mysore, Mangalore."

More than 30% of the total potential in the semiconductor industry would be tapped in the state, which would lead to creation of numerous job opportunities, he added.

Rakesh Singh, additional secretary of IT, Government of India said, "India's IT market has grown from $1 billion in 1991 to $47 billion today and Nasscom projects it to grow further to $175 billion by 2020 and this state will drive a major percentage of this growth."

Other salient features of the policy includes provision of Rs. 25 crore by the state government for raising funds from the market to assist start up semiconductor units engaged in design and embedded software and provision of all encouragement and assistance to the solar PV manufacturing units.

To encourage innovation and R&D in chip design, product development and telecom, the state will set up a fund called 'Karnataka fund for Semiconductor excellence' with a corpus of Rs 10 crore. This fund is available for private companies to cover upto 50% of their R&D expenses, subject to a limit of Rs 10 lakh per unit. The financial assistance is subject to repayment of 10 percent of the profit (after tax) annually for a period of 10 years. "Preference would be given to fresh engineering graduates by indentifying talent through projects submitted in the colleges and start-up companies," said Yeddyurappa.

The government has announced a Rs 100,000-crore information technology (IT) hub of around 40 sq km to be created near the new airport at Devanahalli. The huge project will be completed on the lines of the Public Private Partnership (PPP) model where all amenities and facilities for IT, ITeS and electronic hardware manufacturers will be made available.