New Electronics Policy Lacks A Punch

The draft New Electronics Policy is unlikely to attract any fresh investments into the electronics manufacturing sector as no specific exemptions or measures have been announced to the company’s manufacturing here, according to experts.

The draft document touched upon a wide range of issues. It is a statement of intent but lacks any details of specific measures/incentives or subsidies for players wishing to manufacture here, said Mahesh Uppal, a telecom expert.

“Such details are critical to the investment plans of the companies. This will not impact any current plans. It would mean different things to different people since it is little with words like “promote”, “support”, “facilitate” etc. without giving much idea of their scope. Overall, the policy is weak on analysis of actual problems on the ground or of steps taken to date. It does not say why a new policy is required now,” he said.

Through Make in India initiatives, the government has been able to attract mobile phone manufacturers to the Indian shores but because of a lack of an ecosystem, companies are mostly assembling phones here and the big plan of setting up a fab manufacturing unit has not taken off even after so many years.

It is not possible to develop the whole ecosystem in India, which is why there is a need to incentivize more and value addition via localization in India is required, a senior executive from a mobile firm said.

However, anybody thinking of investing financial or intellectual resources won’t find the policy document specific and unlikely to attract any substantial fresh investments.

This is the reason why the draft has a proposal to promote investment in mega facilities abroad, such as an existing fab facility, including support for setting up of research and development units, where ecosystem exists for a particular technology, the executive said citing the draft policy.

The draft document is not backed up with specific action points and this would mean different things to different people. “Overall, the policy has very few explicit action points. There is no analysis of actual problems on the ground or analysis of steps taken and why a shift is required now. No investor or anybody in the ecosystem will take this,” said another expert.

“What was required was clear action points indicating where the government has changed its previous position and how. There is admittedly a reference to a review of MSIPs but not much else,” adds Uppal.

The ministry of electronics and IT released the draft version of the new electronics policy 2018 which will replace the earlier one announced in 2012. The objective has been to promote manufacturing and design in electronics hardware segment. It also has a big focus on export promotion. It plans to provide an attractive package of incentives for promotion of indigenization and export of electronics allowing Indian Electronic system design and manufacturing (ESDM) exporters by facilitating global market access, entering into Free Trade Agreements (FTAs) with economies such as EU, Africa, and South America.

The aim is to promote domestic manufacturing in the entire value-chain of ESDM for economic development to achieve a turnover of USD 400 billion by 2025, which includes targeted production of 1 billion mobile handsets by 2025, valued at USD 190 billion (around Rs13 lakh crore), including 600 million mobile handsets valued at USD 110 billion (around Rs 7 lakh crore) for export.

The government’s Make in India was launched in September 2014 to boost manufacturing across 25 sectors in the country. Among the most successful sectors has been mobile segment under phase manufacturing programme and differential duty structure. The new policy has accounted for the mobile phones industry as a major part to promote manufacturing.

The draft policy also talks about replacing M-SIPS scheme with schemes that are easier to implement such as interest subsidy and credit default guarantee to encourage new units and expansion of existing units in the electronics manufacturing sector. A single window clearance for investors will be strengthened to facilitate investment and the ministry plans to handhold investors till the manufacturing unit becomes functional.― DNA India

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