This is what Modi govt is doing to beat foreign exchange crisis

With the demand for electronics hardware expected to reach $400 billion by 2023-24, the government is pushing for domestic manufacturing of electronics hardware with value addition. To promote manufacturing and design in the electronics segment, the ministry of electronics and IT on Wednesday released the draft of the new electronics policy 2018, which will replace the earlier policy unveiled in 2012.

“India cannot afford to bear a huge foreign exchange outgo on the import of electronics alone. Therefore, promoting domestic electronics hardware manufacturing, with high-value addition, is of critical importance,” the draft said. The policy has a big focus on export promotion.

It plans to provide an attractive package of incentives for promotion of the indigenisation and export of electronics, allowing Indian Electronic System Design & Manufacturing (ESDM) exporters by facilitating global market access, entering into Free Trade Agreements (FTAs) with economies such as the EU, Africa and South America.

DNA Money in May this year had reported that the new electronics policy will focus on making India an export hub.
The global electronics production is estimated to be $1,740 billion in 2017, growing at a compound annual growth rate (CAGR) of 5%. Indian electronics hardware production has increased to about Rs 3,87,525 crore in 2017-18 from Rs 1,90,366 crore in 2014-15, registering a CAGR of 26.7%, as against a growth rate of 5.5% in 2014-15.

India’s share in the global hardware electronics production is 3.4%. The share of domestic electronics production in India’s GDP is 2.3% and the import of electronic goods stood at $53 billion in 2017-18.

The aim is to promote domestic manufacturing in the entire value-chain of ESDM for economic development to achieve a turnover of $400 billion by 2025, which will include targeted production of 1 billion mobile handsets by 2025, valued at $190 billion (around Rs13 lakh crore), including 600 million mobile handsets valued at $110 billion (around Rs 7 lakh crore) for export.

The draft policy also talks about replacing Modified Special Incentive Package Scheme(M-SIPS) with schemes that are easier to implement such as interest subsidy and credit default guarantee to encourage new units and expansion of existing units in the electronics manufacturing sector. DNA Money had earlier reported this.

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Under the new policy, the government will also provide support for infrastructure development through the formulation of a new scheme or suitable modifications in the existing Electronics Manufacturing Clusters (EMC) scheme, for supporting both Greenfield and Brownfield manufacturing clusters.

Source: DNA Money