The government has received 25 proposals for
manufacturing in the electronic sector under the Modified Special Incentives Package Scheme (MSIPS) worth Rs 13,000 crore. Besides domestic companies, investment proposals have also come from Japanese, American, Korean and German companies, Ajay Kumar, Joint Secretary with the Department of Electronics and Information Technology said on Monday.
"We are finding interest in the manufacturing of automotive electronics, LEDs,
consumer electronics like television, tablets and other electronic manufacturing services activities," he said, on the sidelines of the launch of two reports on the Indian electronic manufacturing sector by lobby body India Electronics and Semiconductor Association (IESA).
MSIPS, an investment based scheme, was notified in July 2012 and involves capex subsidies, reimbursement of excise on capital equipment and reimbursement of central taxes and duties in select sectors such as semiconductor manufacturing.
Automotive electronics, LEDs, flat panel television and tablets are also among a list of 25 priority products IESA and Frost &Sullivan has identified in one of the reports. They account for 82 per cent of overall electronics consumption in India. The report said that speedy policy implementation, incentivising the component ecosystem and restructuring tax structures, among others measures, would promote the development of these products.
Currently, there are many impediments to electronics manufacturing in India caused by tax-related issues, high cost of finance in India, inadequate availability of components within the country, infrastructure issues as well as the high cost of international marketing. All of these need fixing if India is to attract higher investments in manufacturing.
A second report, prepared by Ernst & Young, painted a gloomy picture of Indian manufacturing in the electronics sector. It pointed to the "disabilities"-disability was defined as the difference in the selling price of a product that is manufactured in India versus the same product when it is imported. In the manufacturing of telecom networking equipment, the disability as a percentage of the selling price is a huge 26 per cent, the report stated. It is 19 per cent in the case of point of sale printers and printed circuit boards, 14 per cent when it comes to set top boxes, 13 per cent in the case of notebooks and 7 per cent for energy meters.
"Given the thin profit margins of domestic manufacturers, disability of 7-26 per cent has a huge impact on the businesses of electronic product manufacturers in the country," the report stated.
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