The Union Budget for 2018-19 carries a clear message by applying majority of the country’s resources for upliftment of the poor and under privileged segments of our society. There is also a rural focus and emphasis on providing education, health and social security to all strata of citizens. India is today a USD 2.5 Trillion Economy and the Finance Minister has stated that it would be the 5th largest economy in the world very soon. The current growth rate is hovering at 7.5 percent and we are on course to achieve 8 percent.
Good governance has been a priority for the government and sustained efforts on the part of this government to iron out ease of doing business issues and providing a level playing field are yielding good results. GST, digitization of financial transactions and other related e-governance measures are key instruments to inclusive growth and boost economic growth.
The primary push for ESDM sector this year is the move towards Phase 2 of the Phased Manufacturing Program (PMP) for Mobile Phone manufacturing which was introduced two years ago through differential duty mechanism and later by imposing 10 percent BCD on import of Smart Phones. The enhanced duty on selected inputs is meant to ensure large scale CKD assembly, PCBA’s and a number of mechanical components being manufactured locally. Value addition in mobile manufacturing would grow to 15-20 percent from sub 10 percent levels at present and strengthen the manufacturing eco-system.
LED Display Panels and Flat Panel TV value chain is also addressed in the budget and BCD on Flat Panel Displays has been hiked to encourage assembly within the country. The industry feels that duty hike in inputs should be gradual and should be delayed to next year as the industry is not mature enough. BCD has also been hiked on a number of other products such as Toys, Video Game Consoles and Smart Watches nudging the industry to take up manufacturing of these products which are largely imported.
The Finance Minister has used Customs Duty (BCD) extensively on a number of finished goods with an eye on driving manufacturing growth and to realise the “Make in India” dream. While this is a welcome move and industry has been pleading for it, this is a medium term measure and industry must respond with investments in higher value added manufacturing, technology upgradation and generate employment which is a dire need for our country. It is well documented that a positive duty differential of 10-15 percent is necessary to attract investments in high value added manufacturing. To ensure this, ELCINA has recommended a 10-15-20 Customs Duty structure, thus if components are to be manufactured locally, they need a 10 percent protection, followed by CKD assembly of PCB Boards at 15 percent and finished equipment at 20 percent. This is possible only for non-ITA products and it is a welcome move that this is being implemented via the Phased Manufacturing programs for Mobiles, Set Top Boxes, LED Products etc.
"While ELCINA welcomes the enhanced protection to some products, there is a need to take additional steps to promote manufacturing of ITA-1 items and their components which require huge investments and state of the art technology. The Budget has not allocated any funds for ESDM sector and it is hoped that the National Policy on Electronics Version 2.0 which is under preparation would be adequately funded so that its industry promotion Schemes can be implemented successfully to attract investments", said Rajoo Goel, Secretary General, Electronic Industries Association of India (ELCINA). - City Air News