NEW DELHI: Handset companies and electronics manufacturers have sought incentives such as subsidies on capital and production, better than those being offered by China and Vietnam, to push exports, while seeking quick action for replacement of existing schemes to give clarity to global investors in this sector.
Industry players added that the government should also increase the duty credit scrip on exports to 8%, under any new scheme. "We have to work closely with the government. As a mobile industry, we're all asking for 8% (under MEIS), from 4% today... (incentives) have to be better than China or Vietnam," said Prashanth Mani, managing director at Motorola Mobility and Lenovo Mobile Business.
The top executive added that the increase in duty credit scrip on exports, which are presently being given under the Merchandise Export from India Scheme (MEIS), will have to be done in close consultation with the government which will replace this scheme with remission of duties for export products (RoDTEP) from January 1, 2020.
"The industry, across verticals, has also raised the issue that the period of Modified Special Incentive Package Scheme (M-SIPS) was too small and should be extended further," said a senior executive from a global electronics major, who did not want to be named. The scheme that was launched in 2012 to offset disability and attract investments in electronics manufacturing through incentives was discontinued last year.
Industry players said that addressing the issues and clearing uncertainty would be crucial to India achieving its target of $400 billion in electronics production by 2025, up from $70 billion in 2018-19.
IT and communications minister Ravi Shankar Prasad said Monday that the contours of the scheme will be announced within two to three months. He met with chief executives of over 35 electronics manufacturing companies, including Apple and Samsung.
Prasad had added that the government was working on three schemes, including one on mobile phones, which will include fresh incentives to promote India as a global electronics manufacturing hub. On Tuesday, at an industry event, the minister said that the government wants to focus on a range of electronics industries that can attract global players and drive exports.
"Our focus will be on strategic, defence and medical electronics. I urge industry to partner with giant international companies. India is a huge market waiting to be tapped. We can create champion industries and (raise) exports. If we can raise electronic manufacturing from 20,000 crore, to 70,000 in 4-5 years, that shows the promise," Prasad said.
Industry insiders add that the government must also look at building a robust component ecosystem.
"The government's priorities must involve creating incentives to attract global manufacturing players to India for creating a component manufacturing ecosystem to support local as well as international contract manufacturers," said another executive who met with the government recently.
Television makers added that the government should consider revoking the 10% import duty on open cells, which make up 65% of the cost of making a TV domestically. While the government's aim was to reduce imports and instead promote local manufacturing, the move has in turn led to higher import of fully made TVs from Vietnam through free trade agreement (FTA) route. "This is a critical issue which the government should resolve," said one of the executives quoted earlier.