PMP for four more industries on anvil

Footwear, leather, furniture & AC in focus

Similar to the one devised for mobile phones, the government is reportedly working on a phased manufacturing programme (PMP) for making components in four segments--footwear, leather products, furniture and airconditioners. But a section of the industry is peeved that the government is not engaging with it properly before formulating the programme.

The government had in May 2017 launched the phased manufacturing programme for mobile phones. The programme has played a role in bringing down the import of mobile phones, mobile phone parts, routers, modems, intercoms, etc, from China from $15.3 billion in 2017-18 to $7.2 billion in 2018-19.

The government now wants to implement the programme for other categories as well. The Department of Industry and Internal Trade is working on the PMP, which will help create an ecosystem of component manufacturers for these categories in a timeframe of four to five years.

In the case of air-conditioners, India imported AC units and associated parts worth Rs 11,500 crore in FY19 and Rs 8,800 crore in the first ten months of FY20. Several brands are getting the components from abroad and assembling them in the country. Similarly, categories like footwear, leather goods and furniture also are dependent on imports for procuring components.

According to B. Thiagarajan, joint managing director of Bluestar, the DPIIT has proposed to increase the import duties on components gradually over the years so that domestic manufacturing of components becomes more viable. The government is expected to come up with other measures that can attract investment in component manufacturing.

However, Rafeeq Ahmed, president of All-India Skin & Hide Tanners & Merchants Association (Aishtma) finds that increasing duties before ensuring domestic availability will only result in pushing the prices of finished goods up.

According to him, the DPIIT has not consulted the trade associations properly for framing the programme. "The programme should be useful and result-oriented. For that, the ministry will have to talk to the industry and find out the challenges and opportunities. For instance, the components needed in leather goods keep changing with the changes in fashion. For the policy to be effective, the needs of the industry should be addressed," he said.

A PMP provides tax relief and other incentives to domestic manufacturing with the objective of import substitution and imposes higher duties on imports. PMPs are rolled out over a period of time in a phased manner, focusing on select components each year. Apart from mobile handsets, a PMP is in place for making electric vehicle components under the FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles) programme.