'Budget fails to inspire electronics sector'

Posted By: IANS
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Bengaluru, Mar 2: Dashing hopes of the electronics sector, which was betting on the new government to spur its growth, the budget for fiscal 2015-16 had failed to live up to its expectations, a top trade representative said on Monday.

"The budget has no significant steps to boost our sector. Though it is growth-oriented and people-centric, it does not address our critical demands to boost manufacturing for reducing imports and contribute to the Make in India initiative," India Electronics and Semiconductor Association (IESA) president Ashok Chandak told IANS here.

electronic sector

As a trade body representing the electronic system design and manufacturing (ESDM) industry across the country, the Association had petitioned the government to grant deemed export status for ITA (Information Technology Agreement) products and set up an Electronics Commission, among other things.

Being a member of the World Trade Organisation (WTO) and signatory to the ITA, India has to lower all taxes and tariffs on IT products to zero over a period of time.

The IAT covers products like computer hardware and peripherals, telecom equipment, computer software, semiconductor manufacturing equipment, analytical instruments, semiconductors and other electronic components.

Though the budget encourages start-ups and addresses disabilities partially and skill development, Chandak said their impact on the ESDM sector would be incremental only but not reduce the import bill.

"The budget lacks major stimulus for quick impact to bring down the electronics import bill in near term, as it has no measures to drive innovation and manufacturing on a fast track mode," Chandak, a senior director at NXP Semiconductors India, said.

The industry has recently set a target to reduce import of electronics (finished goods and components) to 50 percent from 65 percent by increasing local manufacturing to 50 percent from 35 percent by fiscal 2016-17.

"We appreciate the government's intent on making India a manufacturing hub through various initiatives, including ease of doing business. But the budget has not spelt out measures to widen our manufacturing base to scale up production rapidly," Chandak lamented.

With the industry's market size projected to touch a whopping $400 billion by 2025 from $90 billion this fiscal (2014-15), the industry hopes to slash imports to zero over the next five years by accelerating ESDM sector growth by 10-15 percent annually.

"The government should extend the MSIP (modified special incentive package) scheme for five years, give mandatory preferential market access to firms manufacturing products within the country and remove curbs on used equipment imported for R&D (research and development,) to enable the sector to be part of the Make in India programme," Chandak asserted.

With 250 members across the country, the Association has been working with nine states to help them in drafting an ESDM policy framework, delivering strategic roadmaps and setting up electronic manufacturing clusters and incubators.

"We hope introduction of the GST (goods and service tax) from 2016 fiscal and transfer of 62 percent receivables to states by the central government will enable them provide additional benefits to attract manufacturing in electronics and create jobs in thousands," the official pointed out.

The Association, however, welcomed the proposal to set up the National Investment and Infrastructure Fund (NIIF) for pushing infrastructure projects, enhance the fund size for the MSME (micro, small and medium enterprises) sector and rationalise SAD (special additional duty) on LED (light emitting diode) television sets, mobile handsets and tablets manufactured in the country.

Similarly, the proposal to set up a National Skill Development Mission will speed up skill sets required for driving innovations in the ESDM across 31 sectors and enhance employability of semi-urban and rural people.

Measures like national optical fibre network programme and promoting cashless transactions will bring momentum in the technology and electronics innovation and usher in Digital India.

"As we have been working with the Electronics Sector Skills Council of India on talent and skill development in our sector, the Mission will help speed up improvising of skill sets in our industry," Chandak added.


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