ELCINA's Press Response -Budget 2020-21
FM demonstrates appetite for imposing higher import duties on Electronics and several Manufactured Products
ELCINA welcomes special mention of Electronics Sector in the Budget with assurance of support to develop the value chain of this industry, including Mobiles, Electronic Equipment and Semiconductor Packaging. This is very encouraging because ELCINA has been urging the government to focus on supporting growth and investments in electronic component manufacturing which is the building block to establish a competitive and sustainable Electronic System Design & Manufacturing Sector in India.
Semiconductor Packaging, popularly known as Assembly Test Mark & Packaging (ATMP) of Semiconductors is the route India must take to leverage its design capability and develop IC Packages to cater to our unique needs. The aspiration to establish a semiconductor fab as the first step has been a miscalculation with little chance of success. With focus on ATMP we are now moving in the right direction to meet domestic demand for low cost technology for our masses and ensure security of our critical infrastructure and defence.
Enhanced duties on mobile inputs should take the manufacturing value chain of this critical product forward as per its PMP, which has a key role to play in Electronics manufacturing. At present it suffers from low value addition and this needs to change. Import duty has also been increased on PCBA’s of several products telecom products, Set Top Boxes, Reception apparatus for TV’s, Solar Cells and some Consumer Electronic products. These steps will surely encourage domestic manufacturing and make investments attractive.
Imposing high Customs Duty on inputs for EV’s may become a road block to rapid growth of EV demand. A more calibrated approach may have been a better route to take.
Several macro steps have been taken in the Budget such as a huge allocation for Bharat Net project which is an excellent step to connect the remotest parts of India and also boost demand for Telecom products and equipment.
It is encouraging to see focus of the Government on giving a boost to farm, infrastructure and healthcare which should revive growth of our economy. Emphasis is seen on capacity building and empowerment of marginalised sections of the society while some steps have also been taken to assuage the business community and investors who have borne the brunt of harsh structural reforms.
Proposals for Start Ups are very encouraging and enhanced Turnover limit and Tax break is a welcome step. With respect to MSME’s the proposal of Working Capital Credit through subordinate debt, equated to quasi equity and increase in the limit for Statutory Audits are welcome steps they provide some procedural relief and addresses their credit requirements. However the issue of definition of MSME limited to Rs 10 Cr Investment remains and has not been addressed in the Budget. This is a major hindrance and anomaly.
The announcements with respect to Personal Income Tax appear positive but we need to work on the fine print. A clear tax benefit could have been provided without the option of both old and new Tax Schemes which has taken away a lot from this positive step.
Overall the scenario appears positive though speedy implementation, protecting the wealth creators and real ease of doing business would decide the impact of this Budget. ELCINA is hopeful that new Schemes under the National Policy for Electronics will be announced soon to meet the aspirations of the sector and adequate budgetary allocations to effectively implement these Schemes.
Thanks and regards
ELECTRONIC INDUSTRIES ASSOCIATION OF INDIA (ELCINA)
(Formerly ELCINA Electronic Industries Association of India - CIN: U74899DL1967NPL015218)
ELCINA House, 422, Okhla Industrial Estate, Phase III
New Delhi 110020, INDIA
Tel: +91-11-26924597, 26928053, 41615985; +91-9911445893