Thursday, August 06, 2014: If online reports are to be believed, Prime Minister Modi has directed the department of electronics and information technology to make sure that the net balance for the electronics should be down to zero by the year 2020.
Although experts call it a tall claim, but ministry is looking deep to achieve this dream by reviewing relevant policies. The feasibility of such directive is questionable unless some radical policy changes are announced. Expert says that India’s electronic import is high since it has to meet majority of demand through this mechanism only. Estimates point it out that by the year 2020, import of electronic would surpass that of oil. In order to achieve this dream, domestic manufacturing sector must get a push.
If we talk about industrial standards, India will have to import $300 billion of electronics out of the total demand of $400 billion over the period of next six years. The official maintained, “We are in process of working out a strategy to meet the PM’s directive”. The Union budget also dealt with the demand of this industry by adopting some corrective measures on inverted duty structures which made it economical to import electronic goods than manufacturing it in India. The department will also review the MSIS(Modified Special Incentives Scheme) under which producers of electronics receive capital subsidy of 20 to 25 per cent from the Centre. The policy’s three year term, which saw proposals $13128 million, which is coming to an end and government is seeking feedback in order to make swift and efficient in the next phase.
Chetan Bijesure, director and team leader of manufacturing at the Federation of Indian Chambers of Commerce and Industry, informed that government plans to attract the foreign investment through many sources. Modi’s visit to Japan and Germany stated that the investors consider East Asian countries provide more incentives to electronics manufacturers than what is being given in India. “If not zero, balances can be reduced to a minimal amount,” added Bijesure.
Under the policy of National Electronics policy of 2011, government launched series of proposals to lure the electronic manufacturers to invest here. Apart from MSIS policy, other measures like setting up of electronic clusters, innovation fund and policy to push domestic goods in the government procurement called preferential market access and setting up of chip fabrication units which is supposed to act as anchors of development are expected to become operational by 2017.
Niju V, head of electronic and security practice at Sullivan’s South Asia and Middle East region informed that we do not export much. “Currently, there is less than 20 per cent of local addition that goes into the product, with 85 per cent of it being imported, which forces us to go for screwdriver technology.” The aim should be to increase the value add percentage in products to between 30 and 50 per cent, he added.