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Triggering The Wave of Local Production

Triggering The Wave of Local Production

Favorable policies and regulations by the Indian government are likely to make India an attractive manufacturing hub with global companies taking strides to enter India and set up a base here.

 The Indian OEM market in 2018 for FPD sets is estimated at 2.836 million sets a 22percent increase over 2017, as against a 12 percent increase in 2017 over 2016. Make in India received a shot in the arm from electronics manufacturing in 2018. Xiaomi, TCL, Skyworth, and Thomson, which until recently were importing televisions, have tied up with OEMs, while BPL has re-started production.

The government had imposed a 10 percent import duty on open cell TV panels in the Union Budget 2017-18 and reduced it to 5 percent in March 2018, after industry requests had been made. Open cell panels, which require some assembling and value-addition before being ready, account for 65–70 percent of a television’s production cost. Currently, there is no open cell panel manufacturing plant in India that needs protection and setting up one of these will take about 4 years. The finance ministry is now likely to scrap the duty to nil, with duty-free imports from ASEAN countries becoming more attractive than manufacturing TVs locally, hurting the Make in India initiative. Samsung Electronics has stopped making televisions in India and is now importing them from Vietnam.

MeitY came out with the draft notification of National Policy on Electronics 2018 (NPE 2018) for the ESDM sector. The draft policy talks about a replacement of certain schemes such as M-SIPS with plans that are easier to implement in order to encourage new units and in the expansion of existing units. The government will provide support for infrastructure development through formulation of a new scheme by modifying the existing EMC scheme. A forward-looking and stable tax regime with a sunset clause is planned to be promoted. The government would levy a cess on identified electronic goods to be considered to generate resources for the promotion of certain critical sub-sectors of electronics manufacturing. The cost of labor and other overheads as a percentage of total cost is considerably lower in India at 12.5 percent compared to China at 16 percent to 18 percent. Overall, all these crucial factors are likely to make India an attractive manufacturing hub with global companies taking strides to enter India and set up a base here.

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