Electronic System Design And Manufacturing (ESDM) Policy And Regulations In India 2014

PRAVEEN-DALAL-MANAGING-PARTNER-OF-PERRY4LAW-CEO-PTLBElectronic System Design and Manufacturing in India is the upcoming field for telecom and electronics companies’ world over. The Department of Electronics and Information Technology (DeitY), India has formulated many pro active and reformative policies and strategies in this regard.

The laws, rules and regulations in India are also reformulated to accommodate the growing demands of ease of doing business in India and foreign direct investments (FDI) in Indian telecom sector. For instance, the FDI Policy in Telecom Sector of India 2014 (PDF) has allowed 100% FDI subject to FIPB approval and other national security requirements. Similarly, approval to establish two semiconductor wafer fabrication manufacturing facilities in India (PDF) has also been granted by Indian Government.

Both domestic and international telecom companies and electronic system design and manufacturing (ESDM) stakeholders must comply with national security and cyber security laws, policies and regulations of India in order to do business in India. The National Cyber Security Policy of India 2013 (NCSP 2013) was recently declared by Indian Government. Indian Government is also planning a legislation mandating strict cyber security disclosure norms in India. Indian Government is also investigating the alleged breach of national security of India by Huawei by hacking base station controller in AP.

Of late, Huawei and ZTE are in telecom security tangle of India and other nations like United States. India even made telecom security a part and parcel of its national telecom policy of India 2012. Other nations are also restricting market access to Chinese telecom equipments and India is not alone. The cyber security concerns excluded Huawei from Australian broadband project. Further, the US house intelligence committee is investigating Huawei cyber espionage angle. Media reports have also speculated that ZTE facilitated e-surveillance in Iran. Now Huawei is trying to inculcate trust among US government over telecom security issues. Companies like Huawei and ZTE are also in constant talks with other nations, including India, in this regard. More such companies can be brought under the legal and national security scrutiny in the near future.

The merger and acquisition rules and regulations in India for telecom sector of India have also been streamlined to provide a level playing field for both national and international telecom companies and ESDM stakeholders. The Guidelines for Merger and Acquisitions of Telecom Companies in India 2014 (PDF) have also been issued and many international telecom companies have shown their interest in this regard.

The estimated production of electronic products will reach USD 104 billion by the year 2020. However, the supply part would not be able to meet this demand curve as domestic companies and stakeholders alone cannot meet this demand. Thus, foreign companies and stakeholders dealing in ESDM have golden chance to capatilise this opportunity.

In fact, the Indian Government has already initiated several initiatives for the development of electronics sector in the country. The Government has recently approved National Policy on Electronics (NPE) 2012 (PDF). One of the important objectives of the NPE is to achieve a turnover of about USD 400 Billion by 2020 involving investment of about USD 100 Billion and employment to around 28 million by 2020. This interalia, includes achieving a turnover of USD 55 Billion of chip design and embedded software industry, USD 80 Billion of exports in the sector. Moreover, the policy also proposes setting up of over 200 Electronic Manufacturing Clusters. Another important objective of the policy is to significantly upscale high-end human resource creation to 2500 PhDs annually by 2020 in the sector.

Several other policy initiatives have been approved in last few months. These include providing very attractive financial investment in electronics manufacturing and providing preference to domestically manufactured electronic goods in all Government procurement as well as all those electronic goods whose use has security implications for the country.

While the opportunities are ample yet techno legal compliances cannot be ignored by both domestic and international telecom players and ESDM stakeholders. Issues like cyber security due diligence, cyber law due diligence (PDF), technology related due diligence, etc cannot be ignored by these stakeholders if they wish to do hassle free business in India.