Budget Wishlist | Manufacturing competitiveness key to sustainable growth

Budget Wishlist | Manufacturing competitiveness key to sustainable growth
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First Published: Thu, Feb 28 2008. 06 23 PM IST

JP Singh, president, Automotive  Industry Association
JP Singh, president, Automotive Industry Association
Updated: Thu, Feb 28 2008. 06 23 PM IST
New Delhi: With the economy in fine fettle and corporate India playing its part in fostering growth, broad fiscal policies can be viewed with satisfaction.
JP Singh, president, Automotive Industry Association
There is consensus on the need to encourage use of technology that will go a long way in facilitating Indian Industry to strengthen its due place in the new world order. State-of-the-art industrial automation technologies strengthen the basic foundation for manufacturing competitiveness.
AIA members are of the view that India’s sustainable growth in the future will be inextricably linked to the success of Manufacturing Competitiveness, which has a multiplier effect in terms of employment, ancillary industries, services etc. Moreover, Indian industry now has global aspirations and this calls for complying with world-class standards of product tracking, consistent quality, efficiency of yields and plant productivity.
Although many industries have adopted ERP and other enterprise solutions at the business level, we still have a long way to go when it comes to leveraging the full potential and competitiveness of the plant and machinery invested in these businesses.
Key recommendations
* Hardware and software component of automation projects, like PLC/ DCS / Inverters & DC Drives - 8538.90.00, 8538.10.00, 8504.40.90 currently attract a basic customs duty of 7.5%. These should be given same benefits as computer hardware for customs and other indirect taxes. At a basic level, both industrial automation and the IT sector are essentially PCB based industries that create multiple value-added, entrepreneurial and employment opportunities
* Simplified accounting procedure for automation companies in SME sector will encourage development of skilled manpower and facilities across a broader spectrum. They may be exempt from special registration of R&D activity and allowed an investment rebate equal to 5% of annual turnover against R&D
* Huge investments are taking place in manufacturing and infrastructure. Project authorities should proactively implement stricter norms of measurement and compliance while granting ’mega-status’ benefits. This is to encourage faster migration to global standards of energy efficiency, pollution control, plant safety and product traceability. Plants should be rated by certification agencies as Cat -1:compliance by semi-automated measurement and control , or Cat-2 compliance by fully-automated measurement and control and given 20% additional depreciation for Cat -2 investments
* Improve plant quality and productivity; IT hardware portion of automation investment to be treated at par with generic computer hardware and software and extend 33% depreciation. Users avail of 33% depreciation on computer hardware and software, whereas depreciation of automation items is governed by the applicable rate (15%) of plant and machinery.
* Plant operating standards and fiscal imbalances need to be urgently addressed to encourage industrial units to scale up their investments in smart technology.
* Typically, investment in automation varies between 5 - 10% of the total project investment in manufacturing and process industries. However, impact on plant output, safety, quality, consistency, material and energy conversion is substantial.
JP Singh is president, Automation Industry Association (AIA
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First Published: Thu, Feb 28 2008. 06 23 PM IST