Taking charge of electronics

With the newly elected government in power, the Indian electronics sector is full of optimism. Growth in this sector, especially in manufacturing, has not taken off and the sector awaits faster implementation of policy. Now, with a strong political mandate, the Government should go ahead to boost business and industry sentiment.

Based on the recommendations of a task force I headed in 2009, the Government had created the electronics policy to cover manufacturing.

Of those recommendations, the one that the Government needs to focus on is the creation of a national electronics mission with adequate manpower to implement the policy. It should oversee the implementation of various programmes spelt out in the national electronics hardware policy and promote India as an electronics hardware manufacturing hub.

An electronics development fund also needs to be set up to encourage design and value addition in India and encourage entrepreneurship in this field. A specific proposal has already been presented to the Government.

The preferential market access (PMA) policy, for example, was a bold and effective step to ensure we create value-added manufacturing in India.

According to the revised PMA policy, local sourcing of electronics will be mandatory for government departments. This will boost domestic manufacturing of electronics, while attracting investments. As a matter of fact, the National Manufacturing Policy also embraces the PMA. The policy will help not just in reducing the current account deficit but also generate employment.

Another important measure is to involve all state governments to create a single agency to facilitate ease in investing and fast clearances.

The Government also needs to approve and release funds for approved projects under the Modified Special Incentive Package Scheme and electronic clusters. Inaction on this has led to a huge gap between policy and execution and has delayed the setting up of infrastructure. The demand for electronics products, especially electronics hardware, has seen a significant growth. India should become capable of meeting this demand.

Another area which needs immediate attention is catering to the demands of large companies that have invested in electronics manufacturing in India. Nokia’s largest factory worldwide for phones is in Tamil Nadu, and a flextronics factory that supplies to them is also in the region.

These factories need to be attended to immediately. Also, many international companies have been reluctant to invest in India due to the lengthy bureaucratic channels. The new government should tackle this immediately.

There are also several factors which are driving demand in the Indian market. Today, India’s semiconductor design industry alone is estimated to be around $6.5 billion. The Government should focus on all pending issues connected with setting up the two semiconductor fabricators in the country.

Also, proposals on the creation of intellectual property (IP) need immediate attention. There has been steady growth in the contribution towards creation of IP, but investments in this field are low. The next big wave of advancement for the country has to be product development and innovation.

The industry is hopeful that the new government will resolve the country’s economic imbalances. The Government will have to be accountable and responsible at all levels to remove the roadblocks to India becoming the next electronics hub.

With China becoming more expensive, India has a great opportunity to meet not only its own needs but export electronics hardware. India needs to scale its facilities and capabilities to a global level and reduce import dependency especially in manufacturing.

Also, we need to encourage innovation and entrepreneurship in this sector to give the desired impetus and move on to an advanced level of manufacturing, acquiring and developing new technologies, with a focus on R&D.

The writer is the founder of HCL

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