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Policy support, ease of doing biz key for electronics sector

As India doubles down on local electronics manufacturing, what is critically required in the Union Budget 2022-23 is the continued policy support as well as more reforms in ease of doing business, Nitin Kunkolienker, President of the Manufacturers Association For Information Technology (MAIT), the apex body representing India’s ICT sector, said on Monday.

According to Kunkolienker, the country has shifted gears in its electronics strategy from an ‘import substitution-led strategy’ to an ‘export-led strategy’.

“We today have Production-Linked Incentive (PLI) schemes to attract global players to shift manufacturing to India in the area of mobiles, IT, medical, white goods, telecom equipment and so on. Looking at the Union Budget 22-23 and beyond, what is critically required is policy support to ensure that these investments succeed,” Kunkolienker said.

The PLI and the scheme for promotion of manufacturing of electronic components and semiconductors (SPECS), among others, have triggered the shift of manufacturing from other countries to India.

However, the sustainability and growth of India’s export-led manufacturing strategy totally depends on the country becoming the most competitive nation in the world.

“Right policy measures and infrastructure investments will make India’s inland and import/export logistics the most efficient in the world. The country cannot aspire to be the global hub for electronics manufacturing without having at least one global transhipment hub for air and one for sea,” Kunkolienker emphasised.

MAIT is the apex industry body for electronics design and manufacturing, representing a $65 billion sector in the country.

According to its President, the second major expectation from the upcoming Budget is more allocations towards skill development.

“Investment in both building the latest labs and trainers who will train the workforce is what this growing electronics industry requires at this crucial juncture,” Kunkolienker emphasised.

The equally critical area, he added, is more reforms in ease of doing business, particularly in import and export procedures, “moving to online time-bound approvals and elimination of duties and taxes with a retrospective effect except in the rarest of cases”.

The industry has hailed the latest government decision to set up the India Semiconductor Mission (ISM) and approve Rs 76,000 crore ($10 billion) for the development of semiconductors and display manufacturing ecosystem in the country.

The Rs 76,000 crore scheme will be spread across six years. As part of the scheme, incentives worth Rs 2.3 lakh crore will be provided to position India as a global hub.

According to Kunkolienker, we are on the first steps of a 20-year journey.

“Hidden in the PLI for semiconductors is a path-breaking policy of design-led incentive — a major step in the direction of design-led manufacturing and creation of India’s own intellectual property (IP),” Kunkolienker said.

Electronics is at its core of a globally entwined value-creation chain.

The key steps to nurture Indian players include demand assurance, access to low-cost finance and risk capital for R&D.

According to the MAIT President, in addition to the PLI-driven strategy, India has the dual advantage of a robust chip design ecosystem and a large domestic market.

“A design-led strategy, coupled with demand aggregation policy strategy, is the best bet for India to boost the PLI scheme into an import substitution play and next, an export-led play,” Kunkolienker noted. Daijiworld

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