Phone and other device manufacturing companies have welcomed the increase in the allocation for the Modified Special Incentive Package Scheme (M-SIPS) and the Electronics Development Fund (EDF) to Rs 745 crore.
But IT hardware makers are looking for more from the Budget.
“A number of global leaders and mobile manufacturers have set up production facilities in India. I have exponentially increased the allocation for incentive schemes like M-SIPS and EDF to Rs 745 crore in 2017-18. This is an all-time high,” said Finance Minister Arun Jaitley while presenting the Union Budget 2017.
India aims to creating an eco-system to make India a global hub for electronics manufacturing. India has received over 250 investment proposals for electronics manufacturing in the last two years, totalling an investment of Rs 1.26 lakh crore.
The allocation of Rs 745 crore is a welcome move which will provide impetus to local component manufacturing in the electronics sector, said Rajesh Agarwal, co-founder of Micromax Informatics.
Manish Sharma, president and CEO of Panasonic India and South Asia, said the budget allocation towards MSIPs and EPF looks progressive and will surely reduce dependency on imports in the phone industry.
The government’s move on imposing a 2 percent special additional duty on populated printed circuit boards (PCB) used for mobile phones imported into the country will provide adequate protection to the domestic industry and give the necessary impetus to ‘Make in India under the GST regime.
M-SIPS scheme provides capital subsidy of 20 percent in SEZ (25 percent in non-SEZ) for units engaged in electronics manufacturing. It also provides for reimbursements of countervailing duty (CVD) / excise for capital equipment for the non-SEZ units.
“We are positive that the government has increased allocation and incentives in schemes like M-SIPS and EDF that will provide the necessary push to the mobile and internet manufacturing economy,” said Arvind R Vohra, country CEO and MD of Gionee India.
Vivek Zhang, CMO of Vivo India, said the move by the government to impose 2 percent customs duty on import of printed circuit boards for mobile phones might initially result in a hike in the cost of smartphones.
In the long run, it will give a boost to governments’ efforts in pushing the ‘Make in India’ campaign. Over the course of time, we can expect complete manufacturing of smartphones in the country by major players in India. Vivo has its own manufacturing plant in India.
The budget gives the Indian smartphone industry a lot to look forward to in the coming year. We now look forward to the rollout of GST this year. This, coupled with other initiatives, will enable us to bring more people under the digital umbrella, said Peter Chang, region head – South Asia and country manager for ASUS India.
Sudhir Kumar, CEO of itel Mobile India, said the allocation has significant prospects for smartphone manufacturing brands.
The Finance Minister has included provisions meant to boost electronic manufacturing by promoting M-SIPS and EDF. Such policies would promote indigenous manufacturers and attract innovation and technology prowess engineered by foreign countries.
IT hardware industry association MAIT said there is a real opportunity to grow the PC manufacturing ecosystem in India leading to increased job creation and impact.
“By not extending the support for local manufacturing to these segments, we are missing an opportunity for creating a robust electronics manufacturing ecosystem,” said Debjani Ghosh, managing director of South Asia, Intel and president of MAIT.
MAIT was hopeful that India Government would extend duty differential scheme to PC, laptop, servers and also cover more critical CPE products such as switches etc as it would have encouraged manufacturing in a big way and would have also created a manufacturing value chain in the country.
“The domestic value addition of around 20 to 30 percent on Bill of material would have been feasible and would have also helped in creating a good export potential from India to be aligned with ‘Net zero import’ strategy of government and we will continue to impress upon MEIT, MOF and other authorities on this,” said Nitin Kunkolienker, vice president of MAIT and director – Corporate Affairs, Smartlink Network Systems.
Domestic value added manufacturing is not supported by the budget and it will encourage imports especially of POS Machines, Micro ATMs and Scanners to promote cashless economy as all duties including BCD, CVD and SAD have been waived.
“The industry had recommended differential duty or imposition of BCD on the finished products to give an immediate boost to their assembly. Waiver of all duties will result in a flood of imports without enabling creation of a local industry and a big opportunity for manufacturing these products in the country would be lost,” said BS Sethia, past president of ELCINA and co-chairman Policy Committee.
