Small SIPS Just Not Good Enough for Hardware Startups
Duty waiver on electronics manufacturing may not have the impact
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.