There is urgent need for India to evolve an export-led electronics manufacturing strategy that will not only contribute to the GDP but also help realize India’s aspiration to become a $5 trillion economy.
Keeping this in mind, the Manufacturers’ Association of Information Technology (MAIT), has released a report titled “Enhancing Export Competitiveness of India’s Electronic Hardware Manufacturing Ecosystem”.
The report, commissioned by MAIT, focuses on analysing the current ecosystem to outline a combination of policy reforms, comprising state and central tax levies, relaxation on corporate income tax and production-based incentives to boost electronics manufacturing in the country.
The study was launched by Ajay Prakash Sawhney, Secretary, MeitY, in the presence of the electronics and IT manufacturing industry, Niti Aayog and Invest India.
As part of its mandate of enhancing “export-led electronics manufacturing”, MAIT has worked out a roadmap for the electronics sector with specific emphasis on Mobiles, Datacom and personal computers (PCs).
In the backdrop of the recent announcement by finance minister Nirmala Sitharaman about introduction of Remission of Duties or Taxes on Export Products (RoDTEP), the report emphasized that in order to compensate for the discontinuation of the Merchandise Export from India Scheme (MEIS) framework, India needs a policy framework that gives a net compensation of minimum 8% to the electronics manufacturing sector to overcome India’s disability.
With India now looking at massive scaling in local manufacturing, MAIT strongly recommends setting up of component hub to decrease India’s disability.
In addition, the study encapsulates the technical reasoning for the harmonization of incentives for both mobiles and chargers to provide impetus for export-led mobile manufacturing in the country.
Speaking at the event, Nitin Kunkolienker, President, MAIT said, “We are committed to bringing a positive change in the sector by moving from a domestic-consumption led manufacturing to an export-led approach. This report is also a step in this direction and the intention is to voice the industry’s requirements and recommendations while identifying key opportunities that can be leveraged to enhance the electronics and IT manufacturing ecosystem in the country.”
Kunkolienker also said India was looking at a foreign exchange bill of ₹5.37 lakh crores on mobiles, PC and datacom product consumption by the domestic market in the year 2025 if the country does not develop an export led manufacturing ecosystem soon.
However, if India aims and achieves 20% share in global production by 2025, then it can generate a net positive foreign exchange of Rs. 1.19 lakh crores and contribute Rs. 4.71 lakh crores to the GDP. Additionally, PCs as a category has the potential of generating a net foreign exchange positive of ₹72000 crore.
Kunkolienker also emphasised that the incentive framework strategy needs to include the component ecosystem so that along with volume, India also builds on value. The report identifies and estimates India’s disabilities and recommends short-term and long-term interventions to create an export-led electronics manufacturing ecosystem in the country.