The Confederation of Indian Industry (CII) has called for a review of trade ties with China, saying in a report that the country’s dependence on electronics components imports poses significant risk to the long-term sustainability of the domestic manufacturing ecosystem.
The industry body suggested a review of press note 3 – which mandates greater scrutiny of investments from countries that share a land border with India – with adequate safeguards.
“India’s electronics industry is at a critical juncture as it needs to urgently transition from an import dependent assembly led manufacturing to component level value-added manufacturing,” the report said.
India’s domestic value addition, at 15%, is well below appreciable standards and can be attributed to the near absent domestic component supply base in the country, it said.
To address the issue, the industry body suggested that the government craft a scheme to offer fiscal support for select components and sub-assemblies in the range of 6-8% for a period of six to eight years to ensure adequate time for scaling up and enhancement in value addition. Further, it said, a scheme for promotio ..
It further suggested that import tariffs on priority sub-assemblies and components such as camera modules, displays modules and mechanicals need to be urgently rationalised in line with key competing economies and that the majority of import duties should be brought down to below 5%.
The report said India should adopt a non-restrictive approach towards investments, component imports, openness towards technology transfer in deficient areas, ease of inward movement of skilled manpower and easing of non-trade tariffs. “Review of Press Note 3 with adequate guardrails should be considered in the current context,” it said.
Escalating tensions with China are said to have cost Indian electronics manufacturers $15 billion in production losses as well as 100,000 jobs in the past four years, ET reported on June 16 edition. It comes amid protracted delays in issuing visas to citizens of the northern neighbour and government probes into Chinese companies operating in India.
In submissions to various ministries, the electronics manufacturing industry has said that India also lost out on a $10 billion export opportunity, besides $2 billion in value addition loss. According to industry executives, 4,000-5,000 visa applications of Chinese executives are currently awaiting government go-ahead, hindering the Indian electronics manufacturing industry’s expansion plans.
The CII further said there is a need to aggressively pursue free trade agreements with the EU, UK, GCC countries and emerging economies in Africa.
The country envisions to manufacture $300 billion of electronic products by 2026 and $500 billion by 2030, which will lead to a demand of electronic components (including semiconductors) of $144 billion by 2026 and around $240 billion by 2030.
While the government is working on building core components like semiconductors and display assemblies to build competitiveness in electronics manufacturing, to build a competitive ecosystem, there is a need to have a middle layer of electronics components such as PCBs, resistors, capacitors, inductors, connectors, mechanics, enclosures and camera modules.
The report identified five high priority components and sub-assemblies of batteries (lithium-ion), camera modules, mechanicals (like e ..
Similarly, printed circuit board assembly is a high potential category for India since most of the demand is met by imports. This segment is expected to grow by 30%, leading to a demand creation of $87.46 billion by 2030.
Currently, manufacturing related cost disabilities vis-à-vis other competing economies such as China, Vietnam and Mexico stand at 10-20% and need to be addressed, the report said.
Source Name : Economic Times