The Hindu : Karnataka / Bangalore News : Component makers want level-playing field

Online edition of India's National Newspaper
Sunday, Dec 09, 2007
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Karnataka

Karnataka - Bangalore

Component makers want level-playing field

Staff Reporter

High taxes push up product cost by 10 per cent
Mmultinational companies importing components

BANGALORE: The electronic hardware industry in India that is in a cost disadvantageous position has sought a supportive policy framework to the sector that is fast losing to imports from other Asian countries because of high cost of production here.

In the light of this, the Electronic Industries Association of India, an umbrella organisation for the small and medium scale enterprises, has sought a level playing ground.

Association president A.G. Rohira told presspersons here on Friday that the industry faced tough competition from other countries because of high domestic taxation, which increased the cost of components produced in India by nearly 10 per cent.

“While the raw materials imported for the components attracted customs duty, the finished component imported from China, Taiwan, Thailand and Malaysia does not attract any duty,” he said.

While the local manufacturing of electronic components was to a tune of $ 16 billion, he said that imports from others countries was around $14 billion, and the demand for electronics hardware was to rise to $ 320 billion by 2015.

“This is barely 1.75 per cent of the GDP when compared to China where electronics hardware output is valued at $ 300 billion, which is over 13 per cent of their GDP,” he said. Stating that the industry had the capacity to produce any component required by any sector, he said: “Ironically, an industry, which has great potential to generate large-scale employment opportunities and wealth, is struggling to survive.”

Cost of production

The cost of production in India was high because of high electricity and labour costs, interest rates and limited scale of production, he added.

According to association vice-president Shobhana Prakash, the arrival of big multinational companies to India had not benefited Indian companies as they were sourcing their components from other countries.

“These companies are sourcing components and assemblies from abroad since the duties on these are being brought down, making Indian products expensive,” she said.

Besides rationalising the tax structure, the association has urged the Government to make it mandatory to all large corporations, whether global or local, to use minimum of 30 to 40 per cent local inputs, which would encourage the local manufacturing sector.

The association had demanded that the investment incentives similar to those provided for semi-conductors should be provided to electronics industry.

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