The government is finalising plans to fund and formulate technology startups that specialise in electronics as it seeks to encourage local manufacturing and limit import of electronic merchandise. Electronic imports is  country’s second-biggest foreign exchange-drainer after oil.

International Institute of Information Technology, Bangalore and Delhi University are being roped in for housing such incubators, as told by a senior government official.

“Promoting startup incubators is an important part of the policy,” said Ajay Kumar, joint secretary, Department of Electronics and Information Technology.

The latest move comes in the wake of government’s earlier initiatives such as the National Electronics Policy 2012 and the Rs 10,000-crore Electronic Development Fund announced earlier this year.

While the government has not decided on how much money will be earmarked for the startup incubators, Kumar said it will it likely to draw from the Rs 10,000-crore fund.

“We are expecting the approval to come in a few weeks,” said S Sadagopan, director at the IIIT-B, which is expecting to support 10 electronic product startups in a year. “We will be putting in Rs 50 lakh on an average per company. This comes to Rs 5 crore per year for the incubator. We are expecting part-funding from Karnataka state government and the central government.”

India imported electronic goods worth $32 billion (Rs 2 lakh crore) in 2012-13, and that amount is projected to cross $300 billion by 2020, when it would have overtaken crude oil as the biggest item on India’s import bill.

Industry observers said that the incubator and funding assistance by government is a step in the right direction, especially as electronics-focused startups face high initial investment.