A Comprehensive Guide to the Electronic Hardware Technology Park (EHTP) Scheme

Introduction

The Electronic Hardware Technology Park (EHTP) scheme is a pivotal initiative by the Government of India to promote the growth of the electronic hardware manufacturing sector. Managed by the Ministry of Electronics and Information Technology (MeitY) and implemented through the Software Technology Parks of India (STPI), this scheme aims to boost exports of electronic hardware products by providing a conducive environment for manufacturers.

Launched in 1989, the EHTP scheme facilitates the development of high-quality electronic products, encourages foreign investment, and promotes the use of cutting-edge technology. This initiative aligns with the government’s broader goals under the “Make in India” and “Digital India” programs to make India a global hub for electronics manufacturing.

Objectives of the EHTP Scheme

Export Promotion:
Encourage the production and export of high-value electronic goods.
Technology Advancement:
Facilitate the adoption of state-of-the-art manufacturing technologies in the electronics sector.
Foreign Direct Investment (FDI):
Attract foreign investment by offering competitive incentives and streamlined processes.
Employment Generation:
Create job opportunities by fostering a robust manufacturing ecosystem.
Infrastructure Development:
Provide world-class infrastructure and facilities to electronic hardware manufacturing units.

Key Features of the EHTP Scheme

1. Duty-Free Import/Procurement

EHTP units can import or procure locally all necessary raw materials, components, and capital goods without paying customs duty, excise duty, or GST.

2. Single-Window Clearance

A simplified single-window clearance mechanism ensures smooth approval processes for setting up and operating EHTP units.

3. 100% Export-Oriented

Units under the EHTP scheme must focus primarily on exports. Domestic sales are allowed but limited to a specified percentage (usually up to 50%) after obtaining approval.

4. Income Tax Benefits

EHTP units are eligible for income tax benefits under Section 10AA of the Income Tax Act for a specified number of years, providing significant cost savings.

5. Infrastructure Support

Dedicated parks and zones under the EHTP scheme provide facilities such as power, water, and high-speed internet connectivity to units.

6. Repatriation of Earnings

Units can repatriate export earnings freely without restrictions, ensuring ease of doing business.

Eligibility Criteria

Nature of Business:
Entities engaged in the manufacture and export of electronic hardware are eligible.
Approval Process:
Applications must be submitted to the STPI or other authorized agencies, along with a detailed project report outlining the proposed operations and export commitments.
Export Obligations:
Units must meet specific export performance obligations to retain benefits under the scheme.

Application Process

Prepare a Project Report:
Create a comprehensive proposal detailing the type of products to be manufactured, expected export revenues, and employment generation.
Submit Application:
Apply to the designated authority (STPI) with all required documentation, including a detailed project report, incorporation certificate, and financial statements.
Approval and Registration:
After evaluation, the application is approved, and the unit is registered under the EHTP scheme.
Set Up Operations:
Once approved, the unit can commence operations, leveraging the benefits of duty exemptions and infrastructure support.

Benefits of the EHTP Scheme

1. Cost Efficiency

The exemption from customs duty, excise duty, and GST reduces the cost of manufacturing, making Indian electronic goods competitive globally.

2. Enhanced Exports

By focusing on export-oriented production, EHTP units contribute significantly to India’s foreign exchange earnings.

3. Access to Advanced Technology

Encouragement to adopt cutting-edge technologies ensures that Indian manufacturers stay competitive on the global stage.

4. Employment Creation

The scheme has created thousands of jobs, particularly in skilled and semi-skilled categories.

5. Support for Startups and SMEs

Small and medium enterprises benefit from the shared infrastructure and resources provided under the scheme.

Challenges in the EHTP Scheme

High Initial Investment:
Setting up an EHTP unit requires significant capital, which may deter small-scale manufacturers.
Stringent Export Obligations:
Failure to meet export performance obligations can lead to the withdrawal of benefits, posing risks for manufacturers.
Global Competition:
Despite the incentives, Indian manufacturers face stiff competition from countries like China and Vietnam in terms of pricing and production capacity.
Policy Overlaps:
Similar schemes like the SEZ (Special Economic Zone) and M-SIPS (Modified Special Incentive Package Scheme) sometimes create confusion among potential investors.

Success Stories under the EHTP Scheme

Semiconductor Manufacturing:
An EHTP unit in Bengaluru developed advanced semiconductors for global markets, significantly contributing to India’s electronics exports.
Medical Electronics:
A Noida-based unit manufactured cost-effective diagnostic devices, earning accolades for its innovative approach and export revenues.
IoT Devices:
A startup from Pune developed IoT-based solutions for smart homes and cities, leveraging EHTP benefits for R&D and export.

Future Prospects

Expansion to New Locations:
Establishing EHTP zones in Tier II and Tier III cities to decentralize the manufacturing base.
Focus on Sustainability:
Encouraging the use of eco-friendly manufacturing practices under the scheme.
Strengthening R&D:
Allocating resources for research and development to boost innovation in emerging technologies like AI and IoT.
Global Partnerships:
Promoting collaboration with international electronics firms to enhance technical know-how and market access.

Conclusion

The EHTP scheme is a cornerstone of India’s electronics manufacturing strategy, offering substantial benefits to manufacturers and boosting exports. By addressing the challenges and leveraging the scheme’s features, India can position itself as a global leader in electronic hardware manufacturing. Entrepreneurs and businesses in the electronics sector should consider the EHTP scheme to harness its benefits, contribute to the economy, and make their mark in the global marketplace.