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The government is studying a proposal to extend benefits meant for electronics makers to white goods manufacturers.
This comes after several consumer durables companies approached the department of electronics and information technology with investment proposals, seeking the same incentives offered to manufacturers of electronics.
Under the Modified Special Incentive Package Scheme (M-SIPS), the government provides 20-25 per cent subsidy on capital expenditure for manufacturers of electronics under 26 categories. This did not include what are termed 'white goods' such as washing machines or refrigerators. An official of the department said such items were not considered under this scheme “as they had very little tech in them”.
This feature is changing, with white goods having a substantial portion of electronics, such as sensors, compared to some years earlier. “It is all part of the electronification of things,” the official said.
The department is still deliberating on whether white goods should be covered under M-SIPS. “The question is where to draw the line,” the official added.
Panasonic, Samsung and Videocon are among the companies which have approached the department for benefits under M-SIPS to be extended to their manufacture of items such as washing machines and refrigerators. Inclusion of white goods under M-SIPS could mean an influx of significant investment towards manufacturing in the country, is one argument.
The Consumer Electronics and Appliances Manufacturers Association (CEAMA) recently gave a set of arguments to the department for including consumer durables under M-SIPS. The association along with APCO worldwide has also made a representation to the Department of Policy and Promotion to extend the scope of consumer electronics under M-SIPS. According to a research paper by the two organisations, the total investment proposals under M-SIPS are worth over Rs 70,000 crore with the total applications being 30 in number. "Though, it is a positive start, the policy needs ‘incremental modifications’ to attract much more investments." Investment proposals related to consumer electronics are just 1% of the entire investment proposals argued the paper. The Electronic industry is global valued at $1.75 trillion and expected to reach $2.4 trillion by 2020, according to 2013 estimates. It is regarded as the largest and the fastest growing manufacturing industries in the world.
Manish Sharma, vice-president of CEAMA, said to they'd recommended the sops under MSIPS be applicable to 'Home Appliances' as there is a necessity to broaden and define by clarifying the definition of ‘Consumer electronics’ which is one of the ESDM verticals under M-SIPS notification. This would trigger significant growth of this sector especially in areas such as washing machines, microwaves, refrigerators and air-conditioners as they too fall under Consumer Durable Industry. Sharma, also managing director of Panasonic India and SAARC, said the association had also made a representation to the department of industrial policy and promotion.
Faisal Kawoosa, lead analyst at CyberMedia Research, said such incentivising of white goods manufacture would be a good move, as these products are increasingly having a higher electronic bill of materials. “It is important we do not neglect that segment, as it could turn out to be a huge opportunity for the country,” he said.
Connected refrigerators, ACs, etc, are becoming popular the world over; in India, it will take another five to eight years for these products to penetrate. Globally, the trend of connected devices is loosely described as the 'internet of things'. By 2020, says research firm Gartner, 26 billion units will make up the 'internet of things' that includes devices such as fitness wearables, smartwatches and smartglasses, and excludes personal computers, tablets and smartphones.
Under its National Electronics Policy, the government launched various schemes, including M-SIPS, to push domestic manufacturing of electronics. According to estimates, India would require $400 billion worth of electronics by 2020, most of which would be imported if domestic manufacturing is not incentivised. In which case, it is feared the country’s electronics import bill will exceed that of oil.
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