Key Challenges:
Restrictions on Chinese Investment and Skilled Personnel:
Introduced in 2020 (Press Note 3) to prevent predatory acquisitions during the pandemic.
Considered outdated and hindering component ecosystem development.
CII suggests revisiting these restrictions with "adequate guardrails".
High Import Duties on Electronics Components:
Duties range from 0% to 27.5%, with most components attracting 10-15% duty.
This inflates manufacturing costs compared to competitors like Vietnam and China.
Limited Production Linked Incentive (PLI) Scheme Impact:
Introduced in April 2020 to offset cost disadvantages.
4-6% fiscal support under PLI deemed inadequate to compete with lower costs in China and Vietnam.
Confederation of Indian Industry (CII) Recommendations:
Relax Restrictions on FDI and Skilled Personnel:
Promote a "non-restrictive approach" for investments and technology transfer.
Ease movement of skilled personnel for knowledge sharing.
Rationalize Import Duties on Components:
Reduce duties on priority sub-assemblies and components to 5% or lower.
Align duty structure with competing economies to improve competitiveness.
No country can be self-sufficient in electronics production.
A balance between imports and exports is crucial for long-term growth.
China, with a $1.6 trillion electronics trade, still relies on 42% imports.
Current policies are hindering India's ambitions of becoming a major electronics manufacturing hub.
The industry suggests a shift towards a more open and investment-friendly environment with rationalized duties to be globally competitive.
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