Draft Electronic Policy Inadequate To Attract Global Companies, Say Handset Makers

The Indian Cellular and Electronics Association (ICEA), which represents handset makers, has criticised the draft National Policy On Electronics and said it is inadequate for attracting global companies.

According to reports, in a letter to IT secretary Ajay Prakash Sawhney, the association demanded special incentives to help develop the country as an electronics manufacturing hub.

The association also stated that global companies such as Apple, Samsung, LG, Oppo, Vivo, Huawei and Foxconn will need a special plan and outreach. This requirement has to be identified in the draft policy.

The Ministry of Electronics and Information Technology (MeitY) had released the draft National Policy On Electronics 2018 in October.

Under this policy, the government aims to achieve a turnover of $400 Bn (INR 28 Lakh Cr) by 2025. This will include targeted production of 1 Bn mobile handsets by 2025, valued at $190 Bn (INR 13 Lakh Cr), including 600 Mn mobile handsets valued at $110 Bn (INR 7 Lakh Cr) for export.

However, the association, in its letter, argued that the draft policy wouldn’t enable the government to achieve its targeted turnover of$400 Bn (INR 28 Lakh Cr) by 2025. It predicted that it would be able to reach only $170 Bn (INR 11 Lakh Cr) by the time.

“The size of the Indian economy would be approximately $4.5-5 Tn by 2023-24. World over, the electronics industry is usually 3-4% of the total size of the economy. Therefore, the size of electronics consumption in India is expected to grow between $150 Bn and $200 Bn by 2023-24,” ET quoted from the letter.

The ICEA also suggested that the central government would have to set up a competitive direct tax regime as in China and Vietnam, adding that its suggestions on exports should be included in the draft policy. It said that the only way to make India an electronics hub is to ensure that foreign countries are attracted to set up operations here.

This development comes at a time when India’s smartphone space is growing fast and is also gaining attention from global players.

According to a recent report by Cisco, smartphone users in India are projected to double to 829 Mn by 2022 from 404.1 Mn in 2017.

Further, the Indian minister of Commerce and Industry and Civil Aviation, Suresh Prabhu, is set to meet the leadership board of the US-based iPhone maker Apple Inc in Davos, Switzerland, this month to discuss the terms of the deal to set up an Apple manufacturing unit in India.

Chinese smartphone manufacturer Vivo is currently ready to set up its second manufacturing plant in Greater Noida area in Uttar Pradesh. Meanwhile, Oppo has too has finalised talks with some of its component makers to set up its production facilities in India.

[The development was reported by ET]