We appreciate the government's intent on making India a manufacturing hub through various initiatives including ease of doing business. It is certain that the Union Budget 2015 will accelerate growth, investments, manufacturing footprint, and job creation in general and pass the benefits to the people. We at IESA believe the Budget will lay foundation for the electronics and technology industry to drive manufacturing and innovation from India. However, there were no major big-bang steps to boost the domestic electronics design and manufacturing. Though measures such as encouraging start-ups, addressing disabilities partially, skill development, funds with states, duty benefits for some products etc. will have incremental positive impact on the ESDM sector.
IESA is glad to have some of its recommendations taken care in the Budget such as measures to promote Make in India for a few high-Impact products, improving on the disabilities factors as mentioned in IESA-E&Y disability report, skill and talent development, and giving boost to the start-up ecosystem.
There were some incremental measures addressing various disability factors impacting the ESDM sector. Establishment of National Investment and Infrastructure Fund (NIIF) will be a good move in pushing the infrastructure projects in our country through Public and Private Investments. Inadequate infrastructure has been a major drawback in attracting the right investments in the manufacturing sector. Measures taken to support the MSME sector will enhance the fund availability in SME manufacturing. Tax incentives and inverted duty benefits on products and components including LED TV, mobile handset, tablets, LED lighting, wafers used in the manufacture of IC modules for smart cards, digital still image/video camera, etc. will have positive impact on domestic electronics manufacturing initiatives. Though, in short term the prices of tablets and mobile phones are expected to increase.
Efforts towards empowering the states with more funds, is a visionary step which will allow them to define the state-specific strategic roadmap with greater clarity. Each state has its own industrial and economical priorities. From our experience in working with nine states, they have a clear roadmap to develop the ESDM sector. The additional funds allocated to them can be effectively used to build ESDM eco-system and attract large scale investments in electronics design and manufacturing &job creation.
Skilling has been a key area of focus for the government and the Budget is underlining this factor with greater priority given for education, training & skilling. National Skill Development Mission will speed up skill set required for driving innovations in ESDM sectors and therefore, enhancing employability of rural and urban people. IESA has recently announced MoUs with VTU, ESSCI, RV-VLSI and SEER Academy as IESA's efforts in the direction of Talent development and Skilling. It is heartening to see the Union government's focus on building the high scale of talent pool as the Electronics Industry grows in India.
We also applaud the government's decision to boost the start-up eco-system in India. Recognising the huge potential of born in India start-ups, the government has allocated Rs 1,000 crore to enable start-up incubation in the technology space and also created a mechanism "Self Employment and Talent Utilisation" to support all aspects of start-ups and other self-employment capabilities. There is a burgeoning start-up environment in the ESDM space and IESA has been aggressively promoting the entrepreneurial activities with setting up incubation centres and it's MOU with TiE as well as focus on Fabless policy. The proposed pro-entrepreneurial initiatives will have a greater role in transforming the ESDM start-ups into the next level.
The announcement to promote innovation and R&D through a 150 crore fund will be a good trigger to drive innovation in the electronics sector from India. Various measures like National Optical Fibre Network Programme (NOFNP) and promoting cashless transaction will bring momentum in the technology and electronics innovation.
While appreciating the government for the progressive measures, there are many crucial factors missing which could have resulted in curbing the ever increasing electronics import costs in a near term. Being the industry body representing the country's ESDM sector, I wish there could have been more measures to push the sector's speedy growth.
We were expecting the government to set up Electronics Commission which will act as a One Stop Shop for implementation of policies, approvals, resolving issues, speedy decision making, etc. for the electronics companies in India and to provide a fair and transparent policy environment for the ESDM sector. There could have more measures to promote localisation of products and demand. In order to boost the R&D activities in the ESDM sector, the Government should have considered removal of restrictions on used electronic equipments import. We were also expecting the extension of MSIPs scheme for five years, financial and liquidity support, mandatory preferential market access to companies manufacturing products in India, etc.
Electronics import has been a growing threat to the country's economy which is expected to grow beyond the desirable levels in the near future. Prevention is the best remedy before it slips from our hands. I agree the government has thousands of priorities and cannot fulfil the wishes of each and every sector at one shot. The government is undeniably aware of the need for building a firm domestic ESDM eco-system which includes enhancing the design and manufacturing competence and we are optimistic about the necessary actions coming from the government in the days to come.
Overall, this has been a positive, growth-oriented and people-centric Budget with the government trying to improve the business atmosphere in the country. It was not a big-bang reformist Budget but the initiatives taken by the government are realistic, future looking and adequate to transform India on a longer run. Rome wasn't built in a day and no developing economy can be transformed overnight. Well done Mr. Finance Minister for the incremental steps taken in your first full Budget.
The author is Chairman, India Electronics and Semiconductors Association