NEW DELHI: The government needs to roll out more incentives, better than those being offered by China and Vietnam, to boost exports in a bid to achieve its vision of net zero imports in electronics, which in any case is set to miss its 2020 target.
According to Consumer Electronics and Appliances Manufacturers Association (CEAMA), factors such as rising disposable incomes and a growing middle class are driving demand for appliances and consumer electronics products, but India’s weak manufacturing base has not been able to respond to this increasing demand, leading to a growing trade deficit.
“The status of the electronics industry is undergoing a change, with electronics being recognised as a key segment for policy focus. But the government has to provide more tax incentives in the desired type of manufacturing if it hopes to attract high-tech and electronics manufacturing for export,” said Kamal Nandi, president, CEAMA, adding that it must also look at building a robust component ecosystem so that more assembly work could be done in India.
Ajay Prakash Sawhney, Secretary, Ministry of Electronics and Information Technology, however, said, “the government is already working on a set of incentives. Special incentives for the consumer electronics industry are also on the anvil.”
Official data shows that electronics imports touched a record $55.6 billion in FY19, as against $51.5 billion a year ago, and remained the largest driver of trade deficit after oil.
For the consumer electronics industry to find a pathway similar to mobile manufacturing, CEAMA suggested a targeted export strategy which will focus on prioritising the consumer electronics industry, augmenting the flow of credit, relaxation from GST, a higher tax deduction for R&D to further boost exports.
Besides, domestic manufacturing faces challenges such as higher transportation and finance (almost double that of China and Vietnam), unskilled labour and inadequate economies of scale.