India has to engage with both foreign tech and indigenous: Piyush Goyal

The electronics manufacturing industry has pushed for more coverage of incentives and higher tariffs on foreign goods

At a meeting with the Electronics and Computer Software Export Promotion Council (ECS India), Commerce and Industry Minister Piyush Goyal said that while domestic electronics makers would need to ramp up indigenous research in technology, India would also have to invite technology from abroad as investments. 

Faced with repeated demands for increasing import duties on electronics and increasing export benefits, Goyal stressed that government incentives in the sector, such as the Production-Linked Incentive for Electronics Manufacturing scheme will ultimately have to lead industry to become self-sufficient. While calling upon the electronics hardware sector to use the route of innovation, R&D and disruption to expand its domestic footprint and increase exports, the minister said that industries that are more self-reliant and try to grow without the support of the government have made their mark. 

The minister said depending exclusively on incentives, such as Merchandise Exports from India Scheme (MEIS), may not add to the competitiveness of the products since such schemes are time bound and export competitiveness should come from inherent strengths. Instead, he flagged the example of the information technology sector which has positioned itself as the only logical provider of software exports.

However, Nalin Kohli, past chairman of ESC said that while India has done well in the export of software and BPO segments, performance in software products, in which world trade is going to rise phenomenally, the track record is not trailblazing. There should be focused attention on segments like artificial intelligence, Internet of Things (IoTs) and cloud computing to tap emerging opportunities, he added.

ECS has also pointed out that quality and accurate data for software and services exports remains missing with the Commerce Department not tracking the flows. Goyal assured exporters that the Department would take up the issue with the Reserve Bank of India, which currently tracks it, but does not share it with exporters.

Hardware demand

Goyal also said the government was working on identifying select electronic items that could be made in India on a large scale like television sets, closed-circuit TVs and air-conditioners, and can be exported in large quantities.

Vinod Sharma, past chairman, ESC, said while most of the growth in electronics manufacturing has come from the mobile phone industry, traditional industry focussed on components like printed circuit boards and products like inverters and telecom equipment can grow from the current $8 billion to $40 billion if production subsidies are extended to all segments. Sharma also flagged the need to position tariffs so that imported finished products are taxed at 20-30 per cent, parts and components at 10-15 per cent and raw materials at 5-10 per cent after India's existing free trade agreements are reviewed.

“We have to move away from the assembling of finished electronics products domestically to a more vibrant backward integration so that a strong electronic component industry along with finished products grows in India,” said ESC Chairman Sandeep Narula.