Govt launches Rs10,000-cr Electronics Development Fund

The central government has launched a Rs10,000-crore fund to promote manufacturing of electronic hardware, particularly targeted at boosting the semiconductor industry. Minister for communications and information technology Ravi Shankar Prasad on Monday formally launched the Electronics Development Fund (EDF) at a function in Mumbai.

Electronics Development Fund (EDF), an initiative of IT department, is formulated as a `Fund of Funds' to participate in `Daughter Funds' which in turn will provide risk capital to companies developing new technologies in the area of electronics, nano-electronics and information technology (IT).

The capital will be routed through daughter funds set up to achieve the objectives of the EDF policy and registered in India as per the relevant rules and regulations, including the Sebi regulations on venture funds.

Sponsored by the Department of Electronics and Information Technology, the fund is being implemented by Canbank Venture Capital Fund Ltd, a subsidiary of state-run lender Canara Bank.

The minister for communications and information technology announced the launch with handing over of the letter of commitment to the first group of Daughter Funds under EDF.

Called Electronic Development Fund (EDF), it will provide risk capital to companies developing new technologies in electronics, nano-electronics and information technology.

The centre will contribute Rs2,200 crore, while the balance will be brought in by private entities. Canbank Venture Capital Fund, has been appointed the implementation agency for EDF.

The Department of Electronics and Information Technology will be the anchor investor.

To start with, the government announced the allotment of funds to four daughter VC funds - Karnataka Semiconductor Venture Capital Fund, Exfinity Technology Fund, Forum Synergies EDF Digital India Fund, and Endiya Seed Capital Corporation Fund.

The centre has provided Rs169 crore to the four companies, while the VC firms are investing close to Rs1,000 crore.

''At any given time, the government will not invest more than 20-25 per cent in the funds, allowing the funds to be managed independently by the fund managers who have expertise in identifying and managing start-up investments,'' said Ravi Bansal, joint secretary, ministry of communications and IT.

IT minister Ravi Shankar Prasad said this was one of his dream projects and the government will do everything to protect the intellectual property of the start-ups that use this fund.

''We would encourage investments in two key areas - cyber security, where I think India can become a hub for innovation, and chip design, where I see a huge scope for designing semiconductor chips in India,'' Prasad said.

The fund will also be used to acquire foreign companies and technologies that are required for building hi-tech capabilities within India, he added.

The fund has a commitment period till 31 March 2017, but according to Bansal, it is unlikely that the entire Rs10,000 crore will be invested by then.

EDF is intended to create an ecosystem for providing risk capital to both industry and academia to undertake research and development in these technology areas. It will, in the process, enrich the intellectual property in the country and encourage more entrepreneurs towards product and technology.