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Tech
Scan
February
17, 2003
ELCINA recommends comprehensive policy package
BANGALORE -- According to Sanjiv Narayan, President,
ELCINA (Electronic Component Industry Association),
it is unfortunate that over the past decade, the electronics
and IT hardware sector has been eclipsed by the glamour
of software. However, no policy for a level playing
field has been devised to stimulate hardware manufacturing.
Narayan
added: "India cannot afford to be a trading nation
guzzling a massive foreign exchange to the tune of $62bn
by 2010, relying on hardware imports. It is also not
it possible to forego the additional 3.5 million jobs
that can be generated by the hardware sector in the
next five years. We have to act immediately to ensure
that the existing hardware industry and investment does
not perish. With the right policy at this juncture,
hardware production can zoom to Rs. 300,000 crore by
2010."
Even
Bill Gates during his recent India visit had expressed
his concern saying: "Why is it that India seemed
behind China in manufacturing, including manufacturing
of electronics hardware? India has all the making of
a competent manufacturing hub, in skilled but cheap
labour, good sense of technology and advanced software
skills to support competitive manufacturing."
These
were some of the issues discussed at the workshop "EMS
- Catalyst for Hardware Manufacturing" organised
by ELCINA along with the Ministry of Communication and
IT at Bangalore. This is seen as a timely action by
ELCINA as electronics manufacturing services (EMS) is
the fastest growing segment and is expected to touch
$500bn before 2010.
EMS,
like components, encompasses all the segments of the
electronics industry, be it telecom, consumer, IT, automobiles,
industrial electronics, etc. Based on historic performance
and the current potential, it has been estimated by
Ernst & Young that India can capture 1 percent of
the North American EMS market, 2 percent of Western
Europe, 4 percent of Asia and 5 percent of the rest
of the World. This will then translate to 2.2 percent
of the worldwide EMS market for India by 2010 amounting
to a sizable $11bn. Considering that our total hardware
production is around $7bn, this additional $11bn can
actually transform the Indian industry. More crucially,
this will provide the much-needed fillip to the electronic
component industry with its current production hovering
around $1.5bn.
ELCINA
is attempting to get the international EMS players to
operate in India to become a part of the global value
added chain in hardware manufacturing. Besides, EMS
also provides a definite opportunity for the domestic
Indian companies especially SMEs. To do this, we also
need to project India's image among the international
community. Hence, there is a need to improve our presence
in major international electronics/IT events as well
as developing strong linkages with global OEMs and EMS
companies, is a must. These issues were also among the
highlighting features of today's workshop.
It
is imperative to focus on the policy and industry initiatives
needed to play the catch up game, as the year 2005 (which
is slated to be the timeframe for zero customs tariff
regime for hardware and components), is round the corner,
says Mr. Narayan. For this, ELCINA has recommended a
comprehensive policy package with the following salient
points:
-
Place
capital goods at nil customs duty and eliminate
import restrictions on second hand plant and machinery.
-
Correct
inverted customs duty structure by placing all inputs/raw
materials of components at nil customs duty.
-
Fine
tune existing EHTP scheme to permit 100 percent
DTA access to all items whether presently at nil
customs duty or slated to go to nil customs duty
as per ITA (Information Technology Agreement) of
the WTO.
-
Put
in place a composite VAT with rates not exceeding
17 percent.
-
Additionally,
modification in labour laws relating to female employees
working in all three shifts and continuation of
export benefit under section 10 A&B had been
sought by ELCINA.
Contact:
Electronic Component Industries Association
Tel : +91-11-2692-4597/8053
Fax : +91-11-2692-3440
Email : somnath@elcina.com
Web: www.elcina.com
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