Government okays Rs 10,000 crore incentive for electronics manufacturing

The Dollar Business Bureau

The government's approval of a Rs 10,000 crore incentive by March 2018 for electronics manufacturing in India has brought the industry closer its goal of 'net zero imports' in electronics by 2020. This incentive, the government says, will bring employment to as many as three crore people.

Consumer Electronics and Appliances Manufacturer Association (CEAMA) has welcomed the move that is likely to reduce India's dependence on imports for many components required in the manufacture of handsets.

The apex body of electronics manufacturers in India has shown its whole hearted support for the 'Make in India' vision through its website. It truly believes that with the right kind of duty cuts and manufacturing incentives, India can become a manufacturing power supplying handsets to its population of a billion people.

Currently, the consumer electronics industry has an average growth rate of 10% per annum, which slowed in the recent months due to demonetisation. To recover from the adverse impact and give a boost to indigenous manufacturers, CEAMA president, Manish Sharma, has demanded that the government hike import duty to 20% (from  10% currently) on the ACE (appliances and consumer electronics) category in its 2017 budget.

On its website, CEAMA also requests the government to initiate a Phased Manufacturing Plan (PMP), that would propel an organised growth of the domestic MSME sector in manufacturing of component parts as well as finished goods.

Pointing out a custom duty anomaly, CEAMA says that the tax structure has been favourable to import of finished goods rather than raw materials. According to the budget of 2016-17, domestic manufacturers of handsets pay a high duty of 29% on many inputs while importers of CBU (completely built units) pay only 12.5% on the same.

In recent times, the electronics manufacturing has seen as many as 42 entrants in mobile manufacturing and 30 new companies in component manufacturing. LG, Bosch Automatic and Samsung are some of the big names that have set shop in India for manufacturing electronics.