Intro: The visionary government of Narendra Modi has announced a slew of fiscal and financial measures to give a fillip to the manufacture of electronic items.
We remember our parents used to fondly buy electronics devices and products like TVs, VCRs and VCPs of foreign make from places like Dubai, Singapore or Hong Kong and bring them to India after paying hefty custom duties during seventies and eighties. This doesn’t happen today. Why? Because, our government slowly reduced custom duty on electronics components that are used in the manufacture of electronics devices like TVs, audio systems, digital cameras, laptops, desktops, mobile handsets etc. But even today, these devices produced by the limited agencies in India are globally not very competitive in prices. They could be made much more competitive if electronics components like ICs, Diodes and Triodes began to be made in India on a larger scale, so that our dependence on imports for them to the extent of 65 per cent is substantially reduced. This is exactly sought to be done by the visionary government of Narendra Modi and a clear blueprint for making electronics components, devices and products in India on a grand scale has been drawn up.
The under mentioned facts and figures will indicate the importance of earmarking electronics components and devices as a distinct category under PM’s ‘Make in India’ campaign. India has the third largest pool of scientists and technicians in the world. Skilled manpower is available in abundance in semiconductor design and embedded software. India already possesses strong design and R&D capabilities in auto electronics and industrial electronics.
The electronics (ESDM) industry is projected to grow with a Compound Annual Growth Rate (CAGR) of 9.88 per cent between 2011 and 2015. India is expected to become a USD 29 billion consumer electronics market by 2020, while the global demand for these items is projected to touch USD 94.2 billion by the end of 2015.
The Government of India has formulated policies to promote the manufacture of electronic items. Notable among these are the Modified Special Incentive Package Scheme and Electronics Manufacturing Clusters Scheme Information. 100 per cent FDI is allowed under the automatic route in the Electronics Systems Design and Manufacturing Sector and is subject to applicable regulations and laws. In case of electronic items for defence, FDI upto 49 per cent is allowed under the government approval route whereas anything above 49 percent is allowed through the approval of the Cabinet Committee on Security. The National Policy on Electronics envisions creating a globally competitive electronics design and manufacturing industry to meet the country’s needs and serve the international market. It plans to attract investment of about USD 100 billion and generate employment for 28 million people at various levels. The Government has announced a slew of fiscal and financial measures to promote electronics manufacturing in India. These are in the nature of excise duty, custom duty and income tax concessions besides preferential market access, subsidies on capital and land and export incentives in the nature of credit scrips.
Investment opportunities exist in setting up of Electronics Manufacturing Clusters, Semiconductor a Wafer Fabrication, Electronics Components, Semiconductor Design, Electronics Manufacturing Services, Telecom Products and Industrial/Consumer electronics. Electronics manufacturing is one area in which acquiring global cost competitiveness is going to be challenging. Hence, FDI should be roped in through aggressive lobbying and canvassing. The only area where India holds advantage is low cost of labour–skilled, semi-skilled or professional. But to enhance the competitiveness significantly, we need to develop original designs of products and get them patented to match and beat existing global giants like Hitachi and Motorola. This activity has to be pursued concurrently with the manufacturing programmes. Existing government agencies like Department of Electronics and Information Technology need to draw up a plan to promote R&D in electronics. R&D in electronics systems manufacturing is an item which, surprisingly, is not conspicuously visible in the Make in India portal pertaining to this sector. Let the government insert this item as required in the blueprint drawn and implement the same earnestly and effectively over time.
(The writer is a senior columnist)