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Budget 2019: ELCINA’s Key Suggestions For Finance Minister For Electronics Sector

The Electronic Industries Association of India (ELCINA) recommended a high focus on promoting investments in electronic component manufacturing and investment promotion in high value-added manufacturing segments such as components (PIEMEC Group), PCB’s, ATMP in semiconductors and EMS.

ELCINA said, “MSMEs must have a specific mention in this budget as they are not getting benefits under current MSME Act definition which defines a very low Investment Limit of only up to Rs 10 Cr for Medium Scale enterprises.”

It suggested 100 percent exemption of direct tax on export profits for first 5 years followed by 50 percent exemption for the next 5 years and 6 percent interest subvention as currently available for the garments industry @3 percent.

Further to kick start the export of electronics from the country, and also attract large domestic and foreign investments in the sector, it recommended support for export via 200 percent deduction of trade fair expenses to grow this industry and focus on exports, this support from government is crucial, especially for MSME’s.

ELCINA in its pre-budget recommendation said, “We are recommending 200 percent as the total expenses for a trade fair are about double of the amount paid to the organizers for space and construction.”

In its pre-budget proposal, ELCINA recommended that Value Added Manufacturing Scheme (VAMS) should be announced in line with MSIPS for high-value addition segments such as Components, PCBs & ATMP by providing direct investment subsidy.

This is recommended through Interest Subsidy on Term Loans and Working Capital Credit, Direct Tax benefits through lower corporate tax rate and subsidies for Employment generation and Skill Development, it added.

The association said “It is recommended that the lower rate of income tax is made applicable say 15 percent for all manufacturers of ITA-1 products and components. This will be WTO compliant which may not be the case for direct export benefits such as MEIS.”

It further recommended that the consignment based permission for the import of raw material should be abolished and yearly permission should be reinstated so that manufacturing in the country do not suffer.

“The Make in India campaign can only be successful when the thrust will be on “Design in India”. This will drive the demand for indigenous components/PCBA’s and assemblies. Imported designs drive demand for imported components and assemblies, and makes dependent on imported components determined by the customer/owner of the design”, said ELCINA.

Key recommendations also include encouraging domestic manufacturing of ITA bound goods, strict implementation of PPO Scheme, promotion of manufacturing of passive, electromechanical and interconnection components (PEMIEC Component Group) and providing Low-Cost Finance.

With regard to customs, the electronics association recommended gold bonding wires for the manufacture of semiconductor components should be allowed at zero duty under end-use certification and DGFT license on the same should be waived.

It further recommended that antidumping duty should be removed from all capacitor grade aluminum foils. There is no scope of misuse of capacitor grade aluminum foil as it is far more expensive than other aluminum foils which are used in general commercial applications.―KNN India

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