Small SIPS Just Not Good Enough for Hard­ware Star­tups

Duty waiver on elec­tron­ics man­u­fac­tur­ing may not have the im­pact

The Economic Times - - Front Page - Neha.Alawadhi@ times­

New Delhi: The fi­nance min­is­ter’s thrust to­wards boost­ing elec­tron­ics and tech­nol­ogy man­u­fac­tur­ing in the coun­try may not have the de­sired im­pact, ac­cord­ing to in­dus­try ex­perts. Fi­nance min­is­ter Arun Jait­ley in­creased the al­lo­ca­tion for in­cen­tive schemes like M-SIPS ( Modi f ie d Speci a l I ncen­tives P a c k a g e S c h e me ) a n d E DF (Elec­tron­ics De­vel­op­ment Fund) to ₹ 745 crore in 2017-18, adding that over 250 in­vest­ment pro­pos­als for elec­tron­ics man­u­fac­tur­ing, with an in­vest­ment of ₹ 1.26 lakh crore, had been re­ceived in the past two years.

“The gov­ern­ment is talk­ing about net zero im­ports of elec­tron­ics by 2020. If you want to achieve that, the first three years should have higher al­lo­ca­tion to at­tract big­ger in­vestors,” said Nitin Kunkolienker, vice-pres­i­dent at Man­u­fac­tur­ers As­so­ci­a­tion of I n for ma­tion Tech­nol­ogy (MAIT), a ski ng for ₹ 2,500 crore of al­lo­ca­tions un­der the scheme.

“It is a very good step for the elec­tron­ics in­dus­try. The neg­a­tive is that the in­dus­try is ham­pered by ex­cise duty dif­fer­ence be­tween In­dia and China, which is our big­gest com­peti­tor,” said Mi­lan Sheth, tech­nol­ogy sec- tor leader at con­sul­tancy EY. T he dut y waiver on d i g it a l pay­ments-re­lated hard­ware and com­po­nents, re­ceived a mixed re­sponse from the in­dus­try. The fi­nance min­is­ter waived ba­sic cus­toms duty, ex­cise/coun­ter­vail­ing duty and spe­cial ad­di­tional duty on minia­turised PoS (point of sale) card reader for m-PoS, fin­ger­print read­ers, scan­ners and iris scan­ners, and on com­po­nents used to make these de­vices. “These will cre­ate the nec­es­sary in­fra­struc­ture to­wards mov­ing to a less cash econ­omy. Also, ex­emp­tion of sev­eral in­di­rect tax du­ties levied on PoS and other de­vices used for dig­i­tal pay­ments will boost dig­i­tal pay­ments,” said In­ter­net and Mo­bile As­so­ci­a­tion of In­dia.

MAIT, how­ever, feels it is a missed op­por­tu­nity. “Both raw ma­te­rial and fin­ished products will be avail­able at zero du­ties, why would any­one go and assem­ble it in an­other coun­try? To boost lo­cal man­u­fac­tur­ing, the gov­ern­ment should have cre­ated a duty dif­fer­en­tial, and levied a duty on as­sem­bled ma­chine and scrap­ping du­ties for r aw ma­te­ria l s re­quired to build the prod­uct,” said Kunkolienker.

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