Better late than never


This is so true with regard to the government’s belated moves to promote Indian manufacturing. It’s good that before it’s too late, the Indian electronics industry will finally get its first policy dedicated to the manufacturing sector. The draft policy has already received the nod from the Prime Minister, and the industry is hopeful that the final policy will be announced soon.

With the manufacturing sector stagnating at around 16 per cent of GDP for the last two decades, and with the demand for electronics goods steadily rising in India, this policy is long overdue. Sectors such as strategic, medical and consumer electronics are estimated to grow to US$ 400 billion by 2020. The government as well as the industry were, therefore, worried about the growing import dependence of the industry. The manufacturing policy will not only help reduce imports, but also boost the development of clusters, generate employment (as per government estimates, the new manufacturing policy will create about 100 million jobs by 2025) and upgrade skills. Already, ELCINA has been given the mandate to facilitate the setting up of the first such cluster in the Noida/Greater Noida region, and to establish the best model that can be replicated throughout the country. Manufacturing clusters are also likely to come up near existing industrial hubs like the NCR, Tamil Nadu and Gujarat, among others.
Some suggestions from the industry will help the government give a better shape to the policy. One such input was that the national investment and manufacturing zones (NIMZs) envisaged in the policy should be contiguous with freight corridors and the golden quadrilateral to ensure easy off-take of the manufactured output. Another suggestion was that tax concessions must be in line with the stipulations of the direct taxes code to be implemented in April 2012 and should be investment centric.
Realising the growing demand for electronics, states like Tamil Nadu have already attracted companies like Nokia, Samsung and others to set up their manufacturing units, due to their electronics hardware policies. To compete with Tamil Nadu, the Karnataka government has also unveiled an electronics hardware policy recently. It has identified three corridors to set up electronics hardware manufacturing hubs and has allocated different areas of hardware for each corridor. It has announced various subsidies for investors in these corridors.



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