Union Budget 2017: What’s on offer for the electronics industry?

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Finance minister Arun Jaitley presented the Union Budget 2017-18 in the Lok Sabha today. Here are some of the key proposals introduced in the union budget 2017 that are related to the Indian Electronics Industry

Union Budget 2017: Incentivizing ‘Make in India’ 

Allocation of Rs 745 crore for MSIPS and Electronic Development Fund to make India a ‘Global Electronics Manufacturing Hub’

“Proposal on making India a global electronic manufacturing hub will boost manufacturing the electronic manufacturing market in the country. This in turn will focus on electronics manufacturing and plans to set up electronics clusters across various towns and cities. The huge investment in manufacturing will bring in more capacity creation within the country, though some amount of deterrence for blindly importing the products will happen simultaneously. Allocation and incentives of schemes like M-SIPS and EDF to Rs745 crore will reflect a strong commitment to promote local value additions in electronics manufacture.”  

Mr. M N Vidyashankar, President, IESA

“We did not see anything very specific on Make in India on this budget and there were two comments by the finance minister on the M-SIPS and on the EDF (Electronic Development Fund). He said that all time high amount of Rs 745 crore has been allocated for this. It is not clear as to what is the period for which the amount has been allocated since the overall limit for the MSIPS was Rs 10,000 crore and the scheme was supposed to come to an end in December 2018. Therefore, it is not clear what was the basis for the amount. Moreover, it seems to be very low, especially if it is for the whole year of 2017-18.I am sure the requirement for M-SIPS and the M-SIPS investment would be higher because the applications for support of worth 1 lakh 24 thousand crore have already been submitted. Even if 25 per cent of the applications gets going in this year, then there will be a need of at least 4-5 thousand crore during this year.”

Rajoo Goel, Secretary General, ELCINA

Defence budget increased by about 5.8 per cent to Rs 2, 74,000 crore 

An increase in the allocation of the defence budget will focus on the country’s Strategic Electronics ecosystem for greater self-reliance. The defence and aerospace sector in the country has seen considerable growth in recent years. The shift from buyer to manufacturer has to be made and this step will further boost the domestic ecosystem.

Union Budget 2017: Key tax reforms for components, products etc.

Reverse Osmosis (RO): Basic Customs duty on Reverse Osmosis (RO) membrane element for household type filters falling under tariff item 8421 99 00 is being increased from 7.5 per cent to 10 per cent Clause 109 (a) of Finance Bill, 2017 refers.

CNC Systems: Concessional Basic Customs duty of 2.5 per cent is being extended to Ball Screws [8483 40 00], Linear Motion Guides [8466 93 90] and CNC Systems [8537 10 00] for use in the manufacture of all types of CNC machine tools falling under headings 8456 to 8463, subject to actual user condition.

Populated PCBs for mobile phones: Populated PCBs of mobile phones are being excluded from the purview of Nil SAD under S. No. 1 of Notification No. 21/2012-Customs [which exempts SAD on items, which are exempt from BCD and CVD]. S. No. 1 of Notification No. 21/2012-Customs dated 17th March, 2012 as amended vide Notification No.4/2017- Customs, dated 2nd February, 2017 refers. Simultaneously, 2% concessional SAD is being prescribed on populated PCBs for use in manufacture of mobile phones, subject to actual user condition. The concessional SAD will be valid till 30th June, 2017. Notification No. 21/2012-Customs dated 17th March, 2012 as amended vide Notification No.4/2017- Customs, dated 2nd February, 2017, [new S. No. 85B] refers.

Micro ATMs, fingerprint reader / scanner, and Iris Scanner : Basic Custom Duty (BCD), CVD (by way of excise duty exemption) and consequently SAD are being exempted on Micro ATMs as per standards version 1.5.1, fingerprint reader / scanner, and Iris Scanner. Further, BCD, CVD (by way of excise duty exemption) and consequently SAD are also being exempted on parts and components for manufacture of these devices, subject to actual user condition. Notification No. 12/2012-Customs, dated 17th March, 2012 as amended vide Notification No.6/2017- Customs, dated 2nd February, 2017, [new S. No. 408A] refers.

Miniaturised POS card reader for mPOS: Basic Custom Duty (BCD), CVD (by way of excise duty exemption) and consequently SAD are being exempted on miniaturised POS card reader for mPOS (other than Mobile phone or Tablet Computer). Further BCD, CVD (by way of excise duty exemption) and consequently SAD are also being exempted on parts and components for manufacture of miniaturised POS card reader for mPOS [other than Mobile phone or Tablet Computer], subject to actual user condition. Notification No. 12/2012-Customs, dated 17th March, 2012 as amended vide Notification No.6/2017- Customs, dated 2nd February, 2017, new S. No. 408A refers.

LED lights or fixtures including LED Lamps:

  • 5 per cent concessional basic custom duty (BCD) is being prescribed on all parts for use in the manufacture of LED lights or fixtures including LED Lamps, subject to actual user condition. Notification No. 12/2012-Customs, dated 17th March, 2012 as amended vide Notification No.6/2017- Customs, dated 2nd February, 2017, [new S. No. 410 A] refers.
  • 5 per cent concessional BCD is also being prescribed on imports of inputs for use in the manufacture of LED (Light Emitting Diode) driver or MCPCB (Metal Core Printed Circuit Board) for LED lights and fixtures or LED Lamps, subject to actual user condition. Notification No. 12/2012-Customs, dated 17th March, 2012 as amended vide Notification No.6/2017- Customs, dated 2nd February, 2017, [new S. No. 410 B] refers.

Solar Cells:

  • Basic Customs Duty (BCD) is being reduced from 10 per cent / 7.5 per cent to 5 per cent on all items of machinery, including, instruments, apparatus and appliances, transmission equipment and auxiliary equipment (including those required for testing and quality control) and components, required for initial setting up of fuel cell based system for generation of power or for demonstration purposes subject to certain conditions. Notification No.5/2017 -Customs dated 2nd February, 2017 refers.
  • BCD has been reduced to Nil on Solar tempered glass for the use in the manufacture of solar cells/panels/modules. CVD on the parts of Solar tempered glass has been reduced to 6 per cent from previous 12.5 per cent.

Union Budget 2017: Ease of Doing Business and Good Governance

  • Over 90 per cent of FDI proposals are now processed through automatic route
  • E-Filling and online FDI Processing to ease investments
  • FIPB has been abolished to encourage foreign investments
  • Propose to reduce corporate tax for cos with annual turnover Rs 50 crore to 25 per cent
  • CBEC will continue to strive to implement GST
  • No change in excise and service tax rates due to upcoming GST
  • Tax relief to start ups for seven years

The overall tax reliefs given to start ups and MSME’s will boost sustainable employment and the quality of start-ups in the design led manufacturing sector

  Union Budget 2017: Encouraging Digital India

  • A Mission will be set up with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards
  • Aadhar-based Payment System to help people not having debit/credit cards
  • Allocation of Rs 10,000 crore for Bharat Net project for providing high-speed broadband in FY18
  • Under the BharatNet Project, OFC has been laid in 1,55,000 kms.
  • By the end of 2017-18, high speed broadband connectivity on optical fibre will be available in more than 1,50,000 gram panchayats, with wifi hot spots and access to digital services at low tariffs.
  • A DigiGaon initiative will be launched to provide tele-medicine, education and skills through digital technology
  • Rural and Semi-Urban Areas to get more funds for creating digital economy

Union Budget 2017: Facilitating Cashless Economy

  • Aadhar-based Payment System to help people not having debit/credit cards
  • Rural and Semi-Urban Areas to get more funds for creating digital economy
  •  Banks to introduce additional 10 lakh PoS by March 2017 and 20 Lakhs Aadhar based swipe machine by 2020.

Union Budget 2017: Enabling ‘Skill India’ 

  • SANKALP Programme for Skill Development with allocation of Rs. 4000 Crore
  • Propose to leverage ICT with the launch of “Swayam” platform which has 350 free courses
  • Innovation fund for secondary education to be set up
  • PM Kaushal Kendra’s will be extended to 600 districts; 100 international skill centers to be opened to help people get jobs abroad

By Sudeshna Das

 

 

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