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Business News/ Politics / Policy/  Govt goes all out to attract foreign electronics makers

Govt goes all out to attract foreign electronics makers

Communications minister Ravi Shankar Prasad will also visit South Korea, Israel and the US this year to sell India as an electronics production hub

Communications minister Ravi Shankar Prasad. Photo: Ramesh Pathania/MintPremium
Communications minister Ravi Shankar Prasad. Photo: Ramesh Pathania/Mint

New Delhi: India is wooing investment by foreign electronics manufacturers as it seeks to cut dependence on imports.

Communications minister Ravi Shankar Prasad, who recently travelled to Germany where he showcased Indian manufacturing capabilities, said he will also visit South Korea, Israel and the US this year to sell India as an electronics production hub.

Prime Minister Narendra Modi, in his Independence Day speech, urged foreign manufacturers to “come, make in India," as the government tries to boost manufacturing’s share of economic output from the 15% at which it has stagnated for decades.

Demand for electronics hardware is rapidly increasing in India and is projected to rise to $400 billion by 2020; domestic production is expected to reach $104 billion, creating a gap of $296 billion between demand and production, according to a report by Deloitte Touche Tohmatsu India Pvt. Ltd.

If India doesn’t move to reduce the widening gap, the country’s electronics import bill may surpass its oil import bill by 2020, some analysts have warned.

“Almost everything, be it mobiles, smartphones, set-top boxes or SIM cards, come from outside India," Prasad told reporters on Tuesday. “We have been focusing on electronic clusters. We have written to all the chief ministers of India and this scheme has energized them. We are laying the foundation of clusters in Bhopal and Jabalpur on 6 October."

In Germany, Prasad and his delegation met vice-chancellor Sigmar Gabriel, who is also the federal minister for economic affairs and energy. They also met executives at companies such as Bosch GmbH, Osram Licht AG, Rohde and Schwarz GmbH and Co. KG, Giesecke and Devrient GmbH, Von Ardenne Anlagentechnik GmbH, Infineon Technologies AG and Coriant GmbH and Co. KG.

“They are very keen on investing in India," said Prasad. “These companies are interested in high-end electronics manufacturing."

“Government policies, stable government, digital India, smartphones, smart cities and opening 49% FDI (foreign direct investment) in defence sector—all of these have propelled electronics demand in India," he said. “Our Germany visit has been successful. We are planning similar visits to South Korea, Israel and Silicon Valley before the year end."

The global electronic industry is expected to reach $2.4 trillion by 2020 from the current level of $1.75 trillion.

“High cost of power and finance, high transactional costs and poor base of supply chain are some of the challenges that multinationals face while enhancing their footprints in India," according to a Deloitte report on the Indian electronics manufacturing sector. “India lags behind in electronics hardware manufacturing capabilities."

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Published: 24 Sep 2014, 12:13 AM IST
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