We Call Upon The Government To Incentivize Manufacturing Linked To Value Addition

Nitin Kunkolienker, President, MAIT in an exclusive interview to Dataquest walks through Electronics and IT Manufacturing scene in the country and takes a realistic due diligence of the scheme of things and how MAIT is empowering the IT manufacturing industry. Excerpts:

- Shrikanth G

Electronics/hardware manufacturing in India has always been a touchy subject - if you look back and cut across all the past rhetoric, what is your realistic assessment of the electronics/hardware manufacturing scene in the country in the past and the current scene?

The actual agenda of Make in India is to transform India into a global manufacturing hub. Although the manufacturing has started with SKD (Semi-knocked Down), however, it is not heading towards CKD (Completely Knocked Down) manufacturing and there is lack of focus on value addition.

In the existing scenario, the current value addition in Electronic and IT manufacturing seems to be in the range of only 5%-10% in spite of various fiscal incentives provided by the Government. It is important to analyze and fix the fundamental reasons contributing to the low value addition, rather than using coercive powers to increase value addition, which is unsustainable.

In order to build a robust value chain - 20-25% domestic content by 2020, which will help facilitate participation in a global value chain. What is required is export orientation approach to fulfill the global demand along with import substitution focus, which can cater to existing local demand. An exports-led approach will provide an additional base of volumes to attract investment in the component ecosystem and will enhance the competitiveness of exports of IT products from India.

For a design-led manufacturing, there is need to incentivize ‘design’ with the increased focus on R&D and IPR. Design in India will ultimately lead to job generation, the creation of local component ecosystem and manufacturing of world-class products in India. The government has realized that the initial appeal around Make in India fell short of expectations and hence is having a relook at National Policy of Electronics afresh.