The Electronic Industries Association of India
called on the government to level the playing field for domestic component makers, saying the field is falling behind thanks to imports and the high cost of local production, say published reports.
The association is urging a platform of changes, including tax reform and government-mandates for all large corporations to use a minimum of 30 to 40% of domestic supplies.
The association also demanded investment incentives like those provided for semiconductors.
The industry faces tough competition because of high domestic taxation, increasing India’s component costs by nearly 10%, association president A.G. Rohira reported. “While the raw materials imported for the components attracts customs duty, the finished component imported from China, Taiwan, Thailand and Malaysia does not,” he was quoted as saying.
The local manufacturing market is worth some $16 billion, while other countries’ imports are $14 billion, the report quoted Rohira. Demand is on the upswing, however: He expects electronics hardware sales to rise to $320 billion by 2015.
As a percent of GDP, India’s electronics sales are 1.75%, miniscule compared to China’s 13% level. Production costs are high because of high electricity and labor costs, interest rates and limited scale of production, the report said.
“[Large multinational companies in India] are sourcing components and assemblies from abroad since the duties on these are being brought down, making Indian products expensive,” said association vice president Shobhana Prakash.