New Delhi: The new National Electronics Policy, which is expected to be finalized by the second half of this financial year, will focus on providing incentives and tax sops to electronic manufacturing companies in India to encourage exports while catering to the demands of the domestic market.

The draft policy is expected to be released for public consultation within a month.

The proposed policy will cover diverse areas, ranging from medical electronics to mobile phones and automotives, right down to the level of components and sub assemblies and will put the onus on increasing value addition capabilities.

The duty structure is geared towards encouraging players to bring in raw modules and components for assembly, according to a senior IT ministry official, who did not wish to be named.

The proposed policy will also leverage the country’s existing strengths in electronics design, given that nearly 75% of global technology majors have research and development presence in India, the official said.

“In our new policy, the direction will be that we would like to provide a strong ecosystem, so that companies come in and manufacture not just looking at the Indian market but also exports," said the official.

“For instance, this year if you bring PCBs (printed circuit boards) that are already populated—meaning all the components are mounted on it—it attracts duty. But if you bring raw PCBs and components and do the entire process here, the costs are lower," the official said.

The country will be moving towards incentivising the export of electronics products manufactured in India, too, said the IT ministry official.

India has not had much success in penetrating the export markets so far, according to the Make in India strategy for electronic products prepared by NITI Aayog in 2016. At $6 billion, India has less than 1% share in the world markets.

Of the country’s total demand for electronics, 50-60% of the products and 70-80% of the components are imported. India’s imports of electronic goods grew 31% between April and October 2017 to $29.8 billion. Meanwhile, the trade deficit reached close to $100 billion during April-November 2017, against $67 billion in the same eight-month period a year ago.

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