Addressing key disabilities: The way forward to realize a globally competitive IT-ESDM manufacturing ecosystem in India

Industry needs support through key policy measures in the spheres of ease of doing business, integrated approach to manufacturing, industry friendly tax regime, skills development and demand generation

Realizing ‘Make in India’ for IT-ESDM: The Way Forward

Keeping in mind the broad development goals outlined in Budget 2016 and large scale national schemes such as ‘Digital India’, ‘Startup India’, ‘Make in India’ etc. , we at MAIT have identified six key factors or ‘pillars’ that can accelerate growth in the IT-ESDM manufacturing industry in India.

While the government’s overall approach to improving the business climate in the country and speed up ‘Make in India’ initiatives will benefit the industry at large, there are some specific steps that must be undertaken to enable large-scale growth in the IT-ESDM manufacturing sector. MAIT would like to suggest the following comprehensive approach covering five key areas:

‘Ease of Doing Business’ in India, in Every State: We need to improve on-the-ground business climate to be able to achieve the triple objectives of high domestic value addition, skills development and employment generation in a time-bound manner. We have to look at creating ‘ease of business’ across all states – the more developed ones such as Tamil Nadu, Karnataka, Maharashtra and Gujarat, as well as upcoming states like Rajasthan, Haryana, Himachal Pradesh, Uttarakhand, Tripura etc. The announcement to speed up construction of national and state highways, rural roads, and construction of new freight corridors, as well as revamp and operationalization of 160 air-strips across the country will go far to realize the vision of ‘Move in India’.

Further, coordinated development of the air, road, rail and inland waterways will give a competitive advantage to goods produced and manufactured in India vis-à-vis countries like China. Interlinked transportation infrastructure development would not only unify our country, but would also take us closer to the cherished national goal of “Ek Desh, Shreshtha Desh” and go a long way in improving the ‘Ease of Running a Business’ in India.

Realizing ‘Make in India’ through an Integrated IT-ESDM Hardware Manufacturing Ecosystem: There is a need to closely coordinate and monitor roll-out of measures envisaged under ‘Skill India’, ‘Start-up India’ and ‘Make in India’ programmes so as to synergize on the gains achieved under each scheme and maximize all-round effectiveness.

The policies in the last ten years (2006-2015) largely promoted ‘financial activity’ and insignificant or low levels of ‘economic activity’ due to direct imports.

By incentivizing large-scale production in India as against trading (imports and distribution), the government will not only achieve its goals of raising GDP, incomes and providing employment opportunities, but will also help India become a global hub for IT-ESDM manufacturing.

To achieve the vision of ‘net zero’ imports of IT-ESDM products, it is not enough to substitute imports with manufacture of complete products in India-based plants. To create an economic multiplier effect for the country as a whole, we need to encourage development of an end-to-end integrated hardware manufacturing ecosystem.

Products like Motherboards, SMPS units, Cabinets, Monitors and Populated PCBs, which have a potential for local manufacturing should be charged Customs Duty at full rate when imported as components for the PC industry; on the other hand, when manufactured in India and supplied to a domestic PC vendor as input these should be exempt from Excise Duty. Gradually, in a phased manner more components should be added to the list. A focus on creating a duty differential will make domestic manufacturing of PCs, both laptops and desktops more viable, as the complete IT-ESDM ecosystem takes shape in India.

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