Indian laptop manufacturers get preferential market access

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Apart from bare PCBs, all other parts and components can be imported, but domestic assembly and testing of all parts and components are required

EB Bureau

Through a notification dated January 22, 2013, the Department of Electronics and Information Technology (DeitY), Government of India, has issued the guidelines for the policy of preferential market access to domestically manufactured laptops and tablets.

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DeitY has notified all the central government departments to procure 50 per cent of their requirements of laptops and tablets from the domestic manufacturers, subject to the domestic products matching certain parameters set by the government and other technical requirements. Also, 50 per cent of domestic value-addition in terms of the bill of material (BOM) is required for laptops to qualify as ‘domestically manufactured’.

The Preferential Market Access (PMA) policy has been issued in an effort to boost indigenous manufacturing of laptops and tablets, and keeping in view the security concerns of the country. This supports domestic manufacturers and gives preference to locally made laptops and tablets.

Parameters that qualify a product as ‘made in India’
As per the notification, laptop PCs, commonly known in the market as a laptop, notebook, netbook or ultrabook, necessarily consist of a CPU, memory, a hard disk drive, keyboard, touchpad and/or trackpoint, an integrated display unit and an integrated battery, and it should be able to operate independently.

For laptop PCs to qualify as domestically manufactured, 25 per cent of the value addition should be done locally in the first year. In case of tablet PCs, this has to be 30 per cent. For customised tablet PCs/handheld devices based on tablet technologies that involve additional (or different) accessories/components, the department will issue a separate notification. The value addition requirement increases 5 per cent every year, from the second year, which begins from April 1, 2014.

Where the policy is applicable
The policy is applicable to all ministries and government departments (except defence) and their agencies, for electronic products purchased for governmental purposes, and not for the commercial resale.

What a manufacturer needs to do
The government has set some parameters for the BOM that will classify a product as ‘domestically-made’.

The table below specifies how much value addition is required for each part that is used in a laptop. The domestic BOM of laptop PCs would be the sum of the cost of the main inputs as specified in column 1 of the table, provided the inputs individually satisfy the value addition requirement specified in column 2 of the table.

Main inputs in BOM/stages for manufacture of laptop PC

Value addition required for the input to be classified as domestic BOM

Hard disk drive

Domestic assembly and testing of imported/indigenously manufactured parts and components is required

Display panel (LCD, LED, etc) + back cover + bezel

Domestic assembly and testing of imported/indigenously manufactured display panel needed. Back cover and bezel or a combination, subject to the condition applicable from the third year onwards:

(i) Back cover has to be domestically manufactured, and

(ii)Backlight assembly and testing of display panel should be done domestically

DVD drive

Domestic assembly and testing of imported/indigenously manufactured parts and components is required

Cabinet + motherboard + power module

Domestic assembly and testing of imported/indigenously manufactured cabinet needed. Motherboard, power module or combination, except value of bare PCB and semiconductor BOM (that is, semiconductor chips and modules on the motherboard) subject to the condition that:

(i) Value of domestically manufactured parts and components used in the assembly of motherboard + power module will be a minimum of 10 per cent (of the total value of parts and components used in the manufacture of motherboard + power module) in the second year, which will increase to a minimum of 20 per cent (of the total value of parts and components used in the manufacture of the motherboard + power module) in the third year and subsequent years, and

(ii) The cabinet shall be domestically manufactured from the third year

Semiconductors (semiconductor chips and modules on the motherboard)

The value of only those semiconductor chips and modules (including processor and memory) of the motherboard will be considered as domestic BOM. However, there is one more condition—the value of the semiconductor clip should be less than the value of testing done domestically

Bare PCB

Has to be domestically manufactured

Power adapter

Domestic assembly and testing of imported/indigenously manufactured parts and components, subject to the condition that the value of domestically manufactured parts and components used in the assembly of the power adapter will be a minimum of 20 per cent of the total value of parts and components used in the manufacture of the power adapter. In the second year, it will increase to a minimum of 30 per cent, whereas 40 per cent and 50 per cent increase will be necessary in the third, fourth and fifth years, respectively

Keyboard/touchpad and/or trackpoint

Domestic assembly and testing of imported/indigenously manufactured parts and components is required

Battery

Domestic assembly and testing of imported/indigenously manufactured parts and components is required

Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine

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