Electronics manufacturing subsidy scheme may undergo a revision

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ElectronicsWednesday, September 03, 2014: Prime Minister Narendra Modi’s agenda of ‘Made-in-India’ has become an inspiration across the country and it’s attracting huge attention from across the globe. Now the Department of Electronics and Information Technology has proposed that the electronics manufacturing subsidy scheme will be revised to become more investor-friendly. The revised version is expected to expand its reach to several new categories and the most significant is white goods.

Modified Special Incentive Package Scheme (MSIPS) added consumer durables, which is expected to attract big-ticket investments in the country. There are several big names which have already approached the department for the incentives which are offered to electronics manufacturers. These companies include Panasonic, Samsung and Videocon. Presently the department is seeking industry’s inputs on the revised draft of the policy. It was notified in 2012 and may expire in July 2015. An official said the policy may get an extension for three more years. The official said, “The procedure is also being streamlined to reduce delay in processing of the applications plus the (investment) thresholds have been rationalised and additional verticals are being added.”

The new added verticals are nuclear fuel cells, smart cards, capital equipment and white goods. A research paper by Consumer Electronics and Appliances Manufacturers Association and APCO Worldwide reveals that the total investment proposals under MSIPS are worth over Rs 700,000 million. However, as the paper noted, “Though it is a positive start, the policy needs ‘incremental modifications’ to attract much more investments.” Senior director of APCO Worldwide Rameesh Kailasam thinks that consumer electronics is the largest and the fastest growing manufacturing industry in the world.

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After industry comments are received, the revised policy will be sent for inter-ministerial consultation. Then it will head for cabinet approval. The government provides 20-25 per cent subsidy on capital expenditure for electronics manufacturers. The revised policy also proposes that Central taxes and duties will be reimbursed for categories like solar cells, nano electronic components, chip components and discrete semiconductors. The new government has been promoting domestic manufacturing of electronics. The Digital-India project looks forward to a net import-export balance of electronics by 2020.

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