Govt move a boost for Indian tech industry

NEW DELHI, INDIA: For a change, Indian ICT hardware and electronics manufacturing segment is rejoicing over the gift that the Ministry of Commerce and Industry has bestowed on them last week by giving priority to technology products and by including 128 technology products from the industry in the market-linked Focus Product Scheme.

“As a consequence of the recession during last two years, Indian industry has faced a severe downturn in its performance and slowdown in exports. The special support provided through the Market Linked Focus Product Scheme is indeed welcome and the electronic component industry is relieved to see that quite a few components such as PCBs, relays, capacitors, resistors, rectifiers have been included in the scheme,” said Rajoo Goel, general secretary, ELCINA Electronics Industries Association of India.

“This will give a boost to the industry, though only for a short period of six months and hopefully we will have breathing space to recover from the losses incurred during the recession,” he added.

The sop, equivalent to two per cent of the export value, will be available for six months starting from April 1, 2010. Under this scheme, the government will issue a credit scrip for exporters which can be used to pay duty and can be sold in open market as well.

Some of the IT and electronic products that have been added under MLFP include desktop, notebooks, unpopulated printed circuit boards, semiconductor devices, capacitors, resistors, LEDs, color TV sets and others under HS code 85.

“This is a great encouragement for manufacturers and exporters in the country. This will help companies in offsetting the disadvantage that Indian manufacturers have over manufacturers in other countries,” said Vinnie Mehta, executive director, Manufacturers’ Association for Information Technology (MAIT).

“Manufacturing in India is expensive by 8 to 20 per cent than compared to the cost of manufacturing in some of the competitive destinations. The government has given incentive of two per cent, which is significant for most of the segment where difference in the margin is close to five per cent,” he added.

According to Mehta, these recommendations were made in IT Task force report.

“I am delighted that the government has accepted some recommendation from IT Task force report. We are looking forward to the day when the government accepts all our proposal submitted in this report,” said Mehta.

Government of India noticed that export of IT and electronics product showed decline of 28.6 per cent as compared to export between April and February in the previous year and hence decided to include 128 IT and electronics product out of 200 new entries under MLFPS.

This is an area of concern and the government has indicated that it is seriously considering measures to promote manufacturing, especially in technology sector.

Last week, even Anand Sharma, Union Minister for Commerce and Industries, at a session organized by Confederation of Indian Industries, expressed his willingness to see technology sector, especially manufacturing, booming in India.

“National manufacturing policy is an issue very close to my heart because of two reasons. First why we don’t have it? Many countries think that India will fail to catch-up with new technology and will be left behind by another decade. We will not let this happen. We will provide incentives for investment and create national technology zone for new technology. We have a dream to make India factory of the world,” said Sharma.

The Ministry of Commerce and Industries has also come up with a consolidated document on foreign trade policy to make it an easy reference guide for foreign investors. Earlier there were 177 press notes that were issued and a foreign investor had to refer to all these press notes for understanding the route to invest in India. The new consolidated document aims to cater the need of all kinds of investors in India.