The Engineering Export Promotion Council (EEPC) has suggested the formulation of a Technology Upgradation Fund Scheme (TUFS) for the engineering sector. It feels this will help India achieve the target of doubling exports in three years.
The department of commerce is coming up with a strategy to double total exports in the next three years. The engineering sector (comprising 60-65 per cent SMEs) has been set an export target of $92 billion by 2013-14, up from an estimated $43 billion in 2010-11. To achieve the target, it has asked EEPC to identify major initiatives required in the Foreign Trade Policy.
The convenor of EEPC’s hand tools panel, Sharad Aggarwal, told Business Standard, “After a meeting on held December 27 with the department of commerce, EEPC India feels that the formulation of a TUF scheme will go a long way in not only helping engineering exports reach $92 billion by 2013-14, but also making India an important engineering export nation by 2020. The fund will help the SMEs in achieving the desired target.”
In spite of massive growth in the last few decades, the Indian engineering sector suffers from severe technological obsolescence and lack of economies of scale. High-value-added products contributed less than 10 per cent of total engineering exports in 2008-09. The need is to step this up to 20-25 per cent in the near future.
The main objective of the TUFS would be to provide the necessary policy wherewithal for modernisation of the engineering sector.
Technology upgradation would mean a significant step-up from the current technology level to a substantially higher one involving improved productivity, improvement in the quality of products and/or improved work environment.
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It would also include installation of improved packaging techniques as well as anti-pollution measures and energy conservation machinery. Further, units that need to introduce facilities for in-house testing and quality control would qualify for assistance, as this is a case of technology upgradation.
The scheme will be available for sourcing of capital goods, machinery and equipment, clean technologies and tooling for production of value-added goods.
EEPC sought a corpus fund of Rs 500 crore for the scheme to boost R&D in the Indian engineering sector. The fund can be created through the public-private partnership (PPP) model, where the engineering industry may be asked to contribute 49 per cent while the government chips in with 51 per cent.
EEPC has also stressed the need for creation of a skill development fund for the engineering industry on the lines of the textile industry policy, to encourage capital equipment purchases on easy finance; a level playing field with respect to financing; a national raw materials policy; and a change in bank lending policies to treat VAT and excise duty receivables by exporters as the primary security for export credit.