Budget 2015: What's Up With The Semicon Industry

by CXOtoday News Desk    Feb 19, 2015


Buoyed by the rising interest of businesses in the Internet of Things and wearable computing, the semiconductor industry is growing rapidly. According to the Indian Semiconductor Association (ISA), the consumption of electronics will rise to $9.7bn in 2015 from $6.03 bn in 2011.This year’s Union Budget, which will be presented next week, is expected to take into consideration the needs of the industry to further that growth.

“Semiconductor electronics industry is core to high-value added manufacturing and with full government support has the potential to attract FDI and Indian investors. The budget should support and strengthen high-value added manufacturing enablers, viz Capital Availability, R&D Intensity, Skilled Labor and Infrastructure,” says Aninda Moitra, President, Applied Materials India.

He added that it should also focus on building a high value manufacturing ecosystem, which enables close collaboration between industry, academia and government. When all of these are in place, India will be well on its way to realize its vision of enabling a self-sufficient, sustainable electronics manufacturing sector.

Setting up of Electronics Commission - According to Ashok Chandak, Chairman, India Electronics & Semiconductor Association, the absence of an Electronics Commission is affecting the ESDM players and the ecosystem. He feels that a commission similar to the Telecom Regulatory Commission in India which will act as a One Stop Shop for implementation of policies, regulations, approvals, resolving issues, etc for the electronics companies in India.It will also provide a fair and transparent policy environment which promotes a level playing field and facilitates fair competition.

Other expectations of IESA on the status of “deemed export” should be granted to ITA1 products/components manufactured and sold in India.

Encourage domestic production: Other than applying additional import duty on NON ITA 1 products, IESA has made a demand to fast track DRM transmitters installation to promote Digital Radio’s and Car audio systems designed and manufactured in India;   Implement smart metering and smart cards;  Standards for Cyber Security, smart grid in India, Smart Lighting, Home automation. To boost domestic production there is a need to mandate government procurement for electronic products manufactured in India. The existing PMA policies framed should be implemented at an immediate basis to leverage electronic products manufactured in India.

Fabless ecosystem:There is also a need to make Government purchases of Indian product mandatory where Indian designed ICs have been used in order to promote the globally competitive growing fabless ecosystem in India.

Equipment import: There has been restriction on imports of used electronic equipment which is treated as Hazardous waste. However, lots of Value Addition and R&D activities takes place through these used imported electronic equipment. Hence the Govt should consider removing these restrictions.

Inverted duty structure: Presently due to the Inverted Duty Structure imports of finished goods are encouraged and the import of semi-manufactured goods and components are discouraged which can be further used for manufacturing completed products in the country where substantial value addition can take place.

Experdite investment proposals approvals and disbursement of funds/Incentives to fast track the manufacturing expansions.