New Delhi: The department of electronics and information technology has proposed higher duties on imported electronic items to boost local manufacturing.
The proposal has been made to the finance ministry to give an “impetus” to domestic manufacturing, Kapil Sibal, minister of communications and information technology, said on Tuesday, announcing the department’s agenda for calendar year 2013.
“Something has to be done to boost domestic manufacturing,” he said, adding that the proposal is one of the department’s pre-budget recommendations.
Finance minister P. Chidambaram will present the budget for 2013-14 in Parliament on 28 February.
India’s electronics import bill is estimated to touch $320 billion (Rs.17.12 trillion) by 2020, possibly exceeding that of crude oil, if domestic manufacturing is not encouraged at this stage, Sibal said. Domestic demand for electronics is estimated to touch $400 billion by 2020.
Currently, India does not levy import duties on several electronic goods, being a signatory of the Information Technology Agreement (ITA-1) under the World Trade Organisation (WTO).
A government official familiar with the department’s plan said that since India can’t raise import duties on such items, the proposal is for increasing levies on electronic goods not covered under ITA-1.
“The focus is on items which are in demand and are not included in ITA-1, such as consumer electronics, medical electronics, etc,” this official said, declining to be identified or share specific names of products included in the proposal.
Finance ministry officials could not be reached for comment.
The government has over the past two years introduced several measures to boost electronic hardware manufacturing in the country, under the National Electronics Policy 2011. The policy includes sops for setting up semiconductor fabrication units and industrial clusters for manufacturing electronics, apart from specifying standards for electronics imports to curb spurious goods from entering the country.
As part of this policy, the government has reserved 30% of all government electronic procurement for companies that can add at least 25% of domestic value to products in the first year of the policy being implemented.
In July, the cabinet approved a Rs.10,000-crore incentive package under the so-called Modified Special Incentive Package Scheme (M-SIPS) for makers of electronics products and components.
Sibal said that on the back of these measures, the government is expecting investments of about Rs.25,000 crore in domestic electronics manufacturing this year, from around 100 units that are to be set up in 10 manufacturing clusters.
A proposal for setting up a government-supported fabrication unit will also be finalised shortly and sent to the cabinet for approval, he said.
“We have to set up a fab (electronic chip fabrication) unit here in this year. Negotiations are on. We will have a proposal very soon in our office. We will take it for cabinet approval for that fab,” Sibal said, adding that the government is in negotiations with two companies for the fabrication unit.
PTI contributed to this story.