Lucknow, Jan 27 (IANS): The Indian Cellular Association (ICA) and the Uttar Pradesh government Tuesday signed an agreement to facilitate investments of Rs.1,000 crore in the proposed Electronics Manufacturing Clusters here.

The Memorandum of Understanding was signed by Pankaj Mohindroo, national president, ICA and Jiwesh Nandan, principal secretary, IT and electronics, on behalf of the Uttar Pradesh government.

"ICA will encourage its members and facilitate to establish their projects in the proposed Electronics Manufacturing Clusters (EMCs) in Uttar Pradesh which are to be established in approximately 100 acres of land or more which can generate investments of approximately Rs.1,000 crore in these EMCs," Mohindroo said.

"For the establishment of EMCs, government of Uttar Pradesh would facilitate ICA to obtain necessary permissions/registrations/approvals/clearances as per the existing policies/rules and regulations of the government and would also help its members to avail incentives under various schemes announced by state/central governments, wherever applicable," Nandan said.

The demand for electronics products in the Indian market was $45 billion in 2008-09 and is expected to reach $400 billion by 2020.

Domestic demand is expected to be driven by growth in income levels leading to higher off-take of electronics products, automation demands of corporate sector and the government's focus on e-governance.

The domestic production in 2008-09 was about $20 billion. At the current rate of growth, the domestic production can cater to a demand of $100 billion in 2020 as against a demand of $400 billion and the rest would have to be met by imports.

This aggregates to a demand supply gap of nearly $300 billion by 2020. Unless the situation is corrected, it is likely that by 2020 the electronics import may far exceed oil imports, ICA said in a statement.

"Our vision is to transform India into a global hub for electronics system design and manufacturing (ESDM) so as to meet the growing domestic and global demand and reduce country's import dependency. There are many challenges to advance the same - infrastructure gap, tax structure, supply chain and logistics, inflexible labour laws, limited R&D focus, inadequate funding and limited value addition," Mohindroo said.

"The industry looks forward to closely working with the central and state government to close these gaps and help realize our vision to transform Uttar Pradesh as a global hub in the ESDM sector," he added.