New FDI norms: Govt plans mega meet to fast-track Make in India

Telecom and IT minister Ravi Shankar Prasad has invited all stakeholders in the handset industry for a meeting next month to clear any doubts on the contract manufacturing policy, says sources

Soon after announcing 100 per cent foreign direct investment (FDI) under automatic route for contract manufacturing, the government is rushing to explain the policy vision to the industry for fast-tracking the Make in India plan.     
 

Telecom and IT minister Ravi Shankar Prasad has invited all stakeholders in the handset industry for a meeting next month to clear any doubt on the contract manufacturing policy, people in the know said. 
 

The meeting is also meant to give a clear road map to firms for both manufacturing and exporting telecom and electronic items. 
 

Companies expected to attend include handset companies such as Samsung, Apple, Xiaomi, Vivo, and Oppo, contract manufacturers like Foxconn and Flextronics, electronics majors Dell and Intel, and industry associations.
 

While manufacturing was already under the 100 per cent automatic approval route, there was no policy provision for contract manufacturing. The Cabinet on Wednesday allowed the same policy for contract manufacturing as well in a bid to bring big foreign brands into the Make in India fold. The latest change is expected to boost local manufacturing, analysts said.
 

The new policy would especially benefit companies, which are not into end-to-end manufacturing of goods for their buyers. 
 

Several manufacturers, which run operations in third party plants by sourcing material from their buyers or which work under the technology transfer agreement, will now be able to bring in FDI through automatic route.
 

The country’s manufacturing base has increased in the past four years since global majors like Foxconn, Flextronics, and Wistron have set up base here. 

 

However, sources in these companies pointed out that the latest clarification will further ease the investment route for several other manufacturers.
 

According to Indian Cellular and Electronics Association’s (ICEA) estimates, between 2015 and 2020, contract manufacturers such as Foxconn and others are investing ~10,000 crore in electronics manufacturing. And the number of manufacturing units for mobile handsets has increased to over 120 as of 2018-end from three in 2015.
 

According to Pankaj Mohindroo, chairman, ICEA, the relaxed norms will benefit local players as well, especially those who do not have the wherewithal to invest large sums to upgrade and expand manufacturing units.
 

“The change in norms boosts India’s prospects as a manufacturing hub and places right against other destinations like China, Vietnam, and Taiwan. This sends out a clear message that companies are welcome to set up plants, manufacture their products and consider India as a global manufacturing hub for telecom products,” said Navkendar Singh, research director of IDC.
 

The easing of investment norms comes months after a new National Policy on Electronics (NPE) was approved. The NPE 2019, among other things, had set an ambitious target of manufacturing goods and offering services worth ~26 trillion by 2025 and half of it is expected to come from a robust mobile handset sector.