MAIT uses its capabilities and expertise and acts as a partner to the industry as well as the government, to help overcome impediments that prevent India from taking its rightful place as a leader in the IT hardware manufacturing sector.

The manufacturing opportunity for India is tremendous as labour costs in China are rising, and manufacturing is shifting out. In order to leverage this development, MAIT is working with the government and industry to take definitive steps and improve India’s manufacturing ecosystem, while also removing the barriers that currently discourage exports. MAIT plays the role of a growth accelerator and promotes manufacturing through incentives that boost the concept of ‘India for the World’ and not just an ‘India for India’ strategy.

We have shaped our manufacturing strategy on four levels, in order to deliver long term value to all our stakeholders:

  • Be the catalyst to change current policy from capex-based incentives to throughput incentives: To enable a robust electronics manufacturing framework, MAIT is urging the government to make a shift from providing capex-based incentives to making them throughput, based on what is being manufactured and the extent of value addition by a manufacturing unit. In fact, MAIT feels that production subsidy must be extended to include all components as well as raw materials. So far, electronics manufacturing has seen the rise of SKD (Semi-knocked Down) manufacturing units. Despite several fiscal incentives, the Governments’ objective of spurring growth of CKD (Completely Knocked Down) units has not come to fruition. At present, value addition within the country is at 5-10 % and India is looking at building a robust value chain with 20-25% of domestic content by the year 2020.
  • Drive for the establishment of component trading hubs and bonded warehouses: Another fundamental task at hand is to establish component trading hubs or bonded cargo warehouses, encouraging domestic manufacturers to procure components from these hubs. MAIT is consistently participating in discussions with the government in this regard.
  • Push for an export-oriented approach by increasing the MEIS rate to incentivise domestic manufacturing: An export-oriented approach can be achieved by increasing the Merchandise Export from India Scheme (MEIS) rate to incentivise domestic manufacturing, provide throughput-based incentive, increase basic customs duty rates for select non-ITA goods and promote PCBA manufacturing in India. MAIT is also looking at ways to curb imports so as to empower electronics manufacturers to cater to local demand.
  • Promote local value addition by boosting the role of SMEs: As India looks to become self-sufficient in electronic manufacturing and propagate more local value addition, it is extremely important that we engage and empower Small and Medium-sized Enterprises (SMEs). MAIT has a strong representation of SME players amongst its members and we are committed to representing their petitions to the government.

Towards realising our goals, MAIT is actively involved in mobilising the industry through the setting up of various committees with specific tasks, drafting representations to the government, organising round tables, conferences and seminars to bring the government, industry and other stakeholders together.

Ease Of Doing Business

MAIT is committed to working with the Government to realise its goal of India breaking into the top 50 countries on the World Bank’s index on ‘Ease of Doing Business’ ranking from its current position of 63. For this, it is imperative that the government and the industry work in unison to develop policies that are progressive, cohesive and conducive. While we work on policy advocacy with the decision makers, it is also MAIT’s endeavour to ensure that the on-ground implementation of these guidelines is efficient and effective. Often execution is a challenge and procedural and process changes are required to be made to increase productivity. On the one hand, those implementing the policy need to be trained to understand its objective and not to give unnecessary importance to minor discrepancies. On the other hand, the industry needs to be guided on making the distinction between an issue of governance (merely a grievance) and a policy issue which hampers Ease of Doing Business.

In order to architect the improvement of Ease of Doing Business index, MAIT recommends the following:

  • Consultation with all stakeholders at the formative stage of legislation:

    Industry should be conferred with before any policy is put in place so as to gain further insights, seek advice and work around possible issues. Emphasis needs to be made on globally accepted best practices being made mandatory. MAIT recommends that policy drafts and proposed changes are made available in the public domain for a reasonable time period before it is made the body of law.

  • Process simplification:

    India still reels under the pressure of the license raj and many of our issues are systemic. The manufacturing sector relies heavily on the timely, physical movement of goods, and therefore is the worst affected by regulation. On an average, a manufacturing unit needs to comply with nearly 70 laws and regulations, file 100 returns a year, and comply with multiple inspections. Taxation issues are encumbering the sector with a plethora of pending litigations, wasting precious government resources. MAIT is consistently involving the government and all relevant stakeholders in workshops to help establish a single clearance window for the electronics manufacturing sector.

  • Establishment of a convergence cell:

    As it stands, with regard to import of IT products, different importers adopt different classifications for the same set of products, owing to no specific classification available in the Customs Tariff. Leaving the decision on customs field officers to use their discretion often leads to delays, especially detrimental to an industry where the time span for obsolesce is limited. MAIT is working with the government to set up a convergence cell, wherein the classification of new IT products should be decided within 30 days of representation.

  • Single, all-inclusive investor policy mandating state-centre coordination:

    There is a massive disconnect between the centre and state with respect to clarity of sector specific policies and integration of investment incentives. MAIT proposes that a Central Investment Facilitation Window is set up to simplify this process and encourage business continuity.

  • Setting up an ESDM buyer-supplier portal – a platform enabling Make in India:

    MAIT endorses the setting up of an electronics supply chain portal where buyers and sellers can forge alliances and integrate with one another. The solution will deploy intelligent recommendation engines to facilitate the best-suited supply chain alliances and connect the global and local manufacturing ecosystem.

Demand Generation

MAIT is actively connecting with the industry and the government to create increased demand for electronics, as both sides stand to gain. Increased technology proliferation is the only catalyst to spur India into a digital and knowledge economy.

Essentially, there are two ways to achieve this:

  • Demand consolidated by government initiatives and policies: Demand generated by government initiatives leads to capacity building and manufacturing of these products, in order to meet the sudden demand. This trend was evident in the LED and CAS model where the ‘Domestic Efficient Lighting Programme’ launched by the Prime Minister was met with the humongous production of LED bulbs. The target to replace 77 crore incandescent bulbs in India with LED, impelled this growth. A similar momentum was seen for set top box manufacturers with the government’s cable digitisation drive.
  • Demand triggered by increasing the consumer market: Increasing the consumer market will change the economy, generate employment and see a rise in Small and Medium-Sized Enterprises (SMEs). It will result in socio-economic growth, as focus will be on growing beyond urban India. Government spend on education, agriculture and ICT infrastructure tend to increase per capita income of the consumer, making devices more affordable to them and this should be leveraged.

Despite the fact that there is demand for electronics, it exists in silos, at this point. There is an urgent need to consolidate this demand to realise economic and social benefits. MAIT positions demand generation in conjunction with demand aggregation. There is a growing need to collate the requirements of the centre and as well as the states and create a depository of demand. This will support more manufacturing and create a pricing advantages.

There are a fair number of bottlenecks that exist with respect to government procurement, and these are being addressed by MAIT. Procurement needs to be streamlined and improvised, so that locally manufactured products are obtained easily by government agencies. The government is one of the largest buyers for the industry and consolidation of orders will result in huge cost-savings. In order to achieve this goal, the Government’s e-Marketplace GeM, has been set up. Going forward, state governments also need to integrate with GeM.

While promoting indigenous manufacturers, steps need to be taken to simultaneously encourage MNCs to invest in the country and for this, their business needs must be taken into consideration. MAIT is consistently looking at balancing the requirements of both SMEs as well as MNCs in all our representations with the government.

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