Rollback of excise duty hike to 12 per cent from 10 per cent, expanding trade agreements with countries, and cut in lending rates are some of the suggestions made by the FICCI-E&Y report to provide an impetus to the consumer electronics manufacturing sector.
These recommendations are aimed at driving government’s ‘Make in India’ campaign. According to the report, the average localisation level across white goods is around 30-40 per cent (considering the parts of the product manufactured in India). Manufacturers on their part are willing to invest in India and build it as a base for exports to MEA (Middle-East & Africa) and SAARC (South Asian Association for Regional Cooperation) regions. However, in order to do so manufacturers face hurdles on taxation aspects like duty structure, cost of capital, under developed local supplier base, business infrastructure and tough business conditions, the study said. “We have an opportunity like never before to create a strong manufacturing base. We have the demand and the volumes needed.
“However, to make it a reality the recommendations have to be implemented fast both in letter and spirit. We will work with the Government to make it happen,” Som Mittal, Chairman, Ficci Electronics & White Goods Manufacturing Committee said. The report also recommends providing deemed export status for pushing exports.
It also suggests an increase in the local demand base so that companies look to increase manufacturing. “We should focus on policies that incentivize high value addition and specialisation leading to manufacturing of key components in India,” said Malay Shah, Director, Advisory, Ernst & Young India. “An impetus from the government will also help in building hyper-scale in assembly, which will propel India as a true export base, and set the industry on course to Make in India aspiration for the sector,” he added.
The report urges the Government to reduce interest rates and taxes to increase disposable income in the hands of consumers, which is likely to lead to an uptake of discretionary spending on consumer durables. Other key suggestions include allowing companies to offer zero per cent finance scheme to drive sales of consumer durables. Almost 30 per cent of overall sales happen through financing schemes, since they help in incentivizing sales.
The report recommends expanding trade agreements with export attractive regions such as Africa and Bangladesh to increase manufacturing base. To further this objective, it also demands the status “deemed export” status should be granted to products and components manufactured and sold
in India.