Guidelines for Indian smart card manufacturers to get preferential market access

0
1599
Advertisement

For contact smart cards or contactless smart cards, value-addition of minimum 30 per cent in the first year is essential. This will go up to 65-70 per cent from the third year onwards

EB Bureau

Monday, 10 June 2013: In a recent notification, the Department of Electronics and Information Technology (DeitY), Government of India, has issued the guidelines for the policy of market preference to domestically manufactured smart cards.
The Preferential Market Access (PMA) policy notified in February 2012 was issued in an effort to boost indigenous manufacturing of electronics products like dot-matrix printers, desktop PCs, laptops, tablets, etc, keeping in view the security concerns of the country. Since then, the government has been coming up with the detailed guidelines for each of these products, one by one. The last set of guidelines was issued for smart cards.

Guidelines for contact smart cards

Advertisement

DeitY has notified all central government ministries and departments (except the Ministry of Defence) to procure 50 per cent of their requirements for contact smart cards from domestic manufacturers. On the other hand, domestic manufacturers should ensure value-addition in terms of the bill of material (BOM) to qualify as a ‘domestically manufactured product’—30 per cent value-addition in the first year, 45 per cent in the second year and 65 per cent from the third year onwards. In this case, the first year one would be up to March 31, 2014.

Criteria for BOM to be classified as ‘domestic’

The guidelines specify that the domestic BOM of contact smart cards would be the sum of the cost of the main components as specified in Column 1 of the table, provided that the these components individually meet the value-addition requirements specified in Column 2 of the table.

Guidelines for contactless smart cards (including dual-interface cards)

For contactless smart cards, domestic manufacturers should ensure value-addition in terms of the BOM to qualify as a domestically manufactured product—40 per cent value-addition in the first year, 50 per cent in the second year and 70 per cent from the third year onwards.

Criteria for BOM to be classified as ‘domestic’

The criteria for the BOM to be classified as ‘domestic’ is the same as with contact smart cards. That is, the domestic BOM of contactless smart cards would be the sum of the cost of the main components as specified in Column 1 of the table, provided that the these components individually meet the value-addition requirements specified in Column 2 of the table.

Recording the extent of value-addition done will be based on self-certification. DeitY may review the notification in case of the technology/manufacturing ecosystem evolving differently from the one envisaged for this notification.

What is a Smart Card
A smart card is usually a credit card sized plastic card with an integrated circuit (IC). The IC contains a microprocessor and memory. Smart cards can be contact, contactless or dual interface (both contact and contactless). Some of the applications of smart cards are as identity cards, banking cards, health cards, vehicle registration cards, etc.

 

Main components in BOM/stages for manufacture of contact smart cards Value addition-required for the components to be classified as a domestic product
Plastic card body Domestic manufacturing, including sheet cutting and punching, printing, lamination, and testing using imported/indigenously manufactured raw material, parts and components, is required
IC chip module For this component one can assemble domestically, but it is required that the packaging and testing of the IC chip module is done using imported/indigenously manufactured raw material, parts and components. This criteria will be reviewed when the semiconductor fab in India is operational
Milling and embedding of the IC chip module on the plastic card This should be done domestically
Final assembly and testing should be done domestically.Intellectual property (IP) resident in India for any of the above items, including fusion of domestically developed operating system, is required.The value of IP resident in India for any of the above items will be reduced from its value in domestic BOM. 

 

Main components in BOM/stages for manufacture of contactless smart cards Value-addition required for the components to be classified as a domestic product
Plastic card body Domestic manufacturing, including sheet cutting and punching, printing, lamination, and testing using imported/indigenously manufactured raw material, parts and components, is required
Card inlay (antenna) Domestic assembly and testing of imported/indigenously manufactured raw material, parts and components are required
IC chip module Domestic assembly, packaging and testing of IC chip module using imported/indigenously manufactured raw material, parts and components are required. This criteria will be reviewed when the semiconductor fab in India is operational
Milling and embedding of IC chip module on plastic card This should be done domestically
Final assembly and testing should be done domestically.Intellectual property (IP) resident in India for any of the above items, including fusion of domestically developed operating system, is required.The value of IP resident in India for any of the above items will be reduced from its value in the domestic BOM. 
Advertisement