National Electronics Policy & Preferential Market Access

Discussion in 'Economy & Infrastructure' started by nrj, Apr 10, 2012.

  1. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    WASHINGTON (Reuters) - Global business groups urged Prime Minister Manmohan Singh on Monday to rescind new government rules for technology purchases that they said unfairly discriminate against foreign firms and potentially violate World Trade Organization rules.

    The letter is the second time in recent weeks that international business groups have written to Singh to complain about new Indian government policies.

    "The undersigned international trade associations, representing thousands of global companies, wish to express our serious concerns with new Preferential Market Access (PMA) rules issued by the Indian Department of Information Technology," the nearly three dozen groups said in a letter.

    They included the U.S. Chamber of Commerce, BusinessEurope, the U.S.-India Business Council and a number of information and computer-technology groups from the United States, Europe, Australia, Canada, Japan, South Korea, Taiwan and Hong Kong.

    They said India's plan to give preference to domestically manufactured electronic goods in government purchasing contracts could backfire on New Delhi by encouraging other countries to adopt measures that discriminate against Indian goods.

    The business groups also said they were worried the new rules could apply to purchases made by some private Indian companies, in addition to government agencies.

    "If the PMA applies to private entities, this would represent an unprecedented interference in the procurements of commercial entities and would be inconsistent with India's WTO obligations," the groups said.

    "We urge the Government of India to rescind this PMA entirely and initiate a consultation process with the private sector and other stakeholders to more effectively address India's security and economic concerns."

    In late March, a coalition representing more than 250,000 companies warned Singh that his government's new retrospective tax proposals has led foreign businesses to reconsider their investments in the country.

    Access to fast-growing markets like India is a priority for many U.S. companies faced with slow growth at home.

    The United States in recent years has run increasingly large trade deficits in advanced technology products, unlike the surpluses that were typical in the 1990s. Last year, the advanced technology trade gap was $99.3 billion.

    India is a growing market for a variety of U.S. exports, but imports from the sub-continent have grown even faster. The U.S. trade deficit with India hit $14.54 billion in 2011, as exports rose to $21.63 billion and imports to $36.17 billion.

    Business groups wrote last month to U.S. Secretary of State Hillary Clinton, Commerce Secretary John Bryson and Trade Representative Ron Kirk urging their help on the technology issue with India.

    Global business groups press India on technology plan - Reuters -
     
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  3. nrj

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    IT industry moans about Indian government's procurement rules

    Will kill off outsourcing

    The Indian government's new procurement rules are threatening to kill off the booming local IT industry.

    Global technology and business groups have written a stiff letter to Prime Minister Manmohan Singh complaining that the government's daft rules on government-purchased technology could have spillover effects on the country’s broader economy

    They point out that India's stance is at odds with the nation’s World Trade Organization (WTO) obligations.

    The rules given would tip the scales towards domestically manufactured electronic goods for government purchase. This is against any WTO agreements.

    The letter said that India exemplified the benefits of competition and regulatory reform as demonstrated by the tremendous growth in the telecommunications and IT services sector over the past fifteen years.

    Indian needs to remain on this path because its economic growth and "ability to continue to be competitive in the global ICT sector depend on it," the letter said.

    If other governments see India doing this, they might enact sanctions of their own. A US government department might be banned from using Indian outsourcers, for example.

    The letter was sent by the Information Technology Industry Council (ITI), Telecommunications Industry Association (TIA), U.S.-India Business Council (USIBC), and 32 other associations from the United States, Europe, Japan, Canada, Australia, Hong Kong, and Korea.

    The groups urge India to rescind the PMA and initiate a consultation process with the private sector and other stakeholders to develop policy approaches that will promote ICT sector growth without creating market-distorting policies.


    Read more: IT industry moans about Indian government's procurement rules - Will kill off outsourcing | TechEye
     
  4. nrj

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    From 2011

    Policy moots preferential market access for local equipment manufacturers

    New Delhi: In order to end the dependence on Chinese and other overseas telecom equipment manufacturers and increase reliance on local suppliers, the draft New Telecom Policy 2011 draft has set an aggressive target to promote the domestic production of telecommunication equipment so as to meet 80% of the demand generated by the Indian telecom sector over the next 10 years.

    In order to achieve this, the government will provide preferential market access for domestically manufactured telecom products, including mobile devices and SIM cards.

    “The aim is to spur the domestic telecom equipment manufacturing segment to meet the indigenous demands for becoming self-reliant in telecom/ICT equipment design and manufacturing. The domestic demand is estimated to be of the order of R2,50,000 crore by the end of 12th five year Plan,” telecom minister Kapil Sibal said while announcing the policy.

    Under NTP 2011, the government is looking to set up a council consisting of experts from telecom service providers, telecom manufacturing industry, government, academia and R&D institutions. The proposed council will carry out technology and product development forecast, evolve and periodically update the national programme for technology/product develop- ment and become a nodal group to monitor and ensure the implementation of various recommendations made for promoting indigenous R&D, IPR creation, and manufacturing and deployment of products and services.

    The aim under NTP 2011 will be to harness India’s entrepreneurial energy and intellectual capital for the cause of R&D and manufacturing, Sibal said. Also, the government will give special emphasis on the creation of Indian IPRs which will go a long way in developing ‘brand India’

    Policy moots preferential market access for local equipment manufacturers
     
  5. nrj

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    Indian electronics companies will get preferential market access, says Sibal

    February 2012

    The Union Government has cleared a policy that aims to provide “preferential market access” to Indian electronics hardware companies as part of a strategy to develop indigenous capability in electronics, Kapil Sibal, Union Minister for Communications and Information Technology, said on Monday. Mr. Sibal was addressing ‘Vision Summit', organised by the Indian Semiconductor Association here.

    Mr. Sibal said preferential access would be provided to domestic electronics manufacturers of products, “which have security implications or products purchased by governments (including states) for their own use.”

    The policy stipulates an initial minimum indigenous value addition of 25 per cent, which will go up to 45 per cent in the fifth year, he said. The strategy includes the establishment of semiconductor fabrication units in the country, for which Expressions of Interest had already been floated by the Government.

    An independent National Electronics Board, which would oversee the implementation of the new policy for the sector, was another aspect of the strategy, Mr. Sibal said.

    The approach included a regime of subsidies for investments for a period of 10 years. “This window will be open for a three-year period,” he clarified.

    Mr. Sibal said an Electronics Development Fund, with a corpus of Rs. 10,000 crore would be created. The fund would support research and development activity, invest in the development of intellectual property and enable transfer of technologies, he added. Mr. Sibal said the upgraded version of Akash, the low-cost tablet, would offer opportunities to Indian hardware manufacturers. He said the Government would reduce the cost from the current level of Rs. 2,276 per unit to about Rs. 1,500 per unit when production would be scaled up to one million tablets.

    Union Minister of State for Communications and IT Sachin Pilot was present.

    The Hindu : Today's Paper / NATIONAL : Indian electronics companies will get preferential market access, says Sibal
     
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    Last edited: Apr 10, 2012
  8. nrj

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    Revamping India's electronics industry

    India’s electronics import bill is estimated to exceed that of oil by 2020. The industry can gain much via preferential access to domestic manufacturers via the Aakash & Aadhaar projects. The global electronics industry is one of the fastest growing in the world and demand in the Indian market is expected to touch Rs 1920 crore (USD 400 billion) by 2020. Manufacturing has been recognised as the main engine for economic growth and an ambitious target of taking the share of ICT and electronics hardware manufacturing to around 25 percent by 2025 has been set by the National Manufacturing Policy. Being the world’s second-most populous country, coupled with robust growth, India will remain one of the largest consumers of electronic products globally.

    The industry is poised to ride the wave of domestic demand for electronic products. Developing core areas of design and application development will only help catapult the Indian electronics and manufacturing industry towards greater innovation in local and global markets. What the industry needs today is a clear vision for the sector, supported by suitable policy interventions, increase in government requirements to spur innovation in the sector and an enabler for domestic manufacturers to move up the global value chain.

    To make this a reality, government and industry should focus on increasing domestic demand. The made-in-and-for-India mantra, especially huge demand from the government sector, is key to propelling the potential of this sector. Picking up one such instance from history—in the early 1980s, the government decided that domestic banks should computerise their operations. The C Rangarajan committee asked banks to use minicomputers based on the UNIX platform. This huge demand from the government was a catalyst that led to an explosion in the domestic manufacturing industry.

    Now, with tablets making it to the mainstream, we have another challenge at hand. The Aakash project is a fantastic move by the government; I call it a challenge thrown at the Indian manufacturing industry to achieve a price point with the specification that the government has in mind. I have always stood by access for all to be made a fundamental right. I firmly believe that any step taken in the direction to democratise access needs to be supported. Aakash too is a revolutionary concept and, today, needs design innovation with quality to lead the way. Whether the Indian industry is able to meet this requirement or not is another point. But what is important to note is that concepts such as Aakash, backed by a huge domestic demand, prompt an evolution of innovative ideas. Remember how the OLPC (one laptop per child) project gave rise to a similar scenario that created the netbook category.

    Another such initiative of national importance, in my view, that can unleash the innovation potential of domestic design and manufacturing is the UIDAI’s initiative, Aadhaar. With Aadhaar, the government of India has set for itself the mammoth task of creating a national database of citizen information based on 12 parameters of demographic and biometric data, where technology innovations have to play a pivotal role. UID will provide over a billion citizens with a unique digital identity. It is aimed at ensuring inclusive growth, reforming delivery of government benefit schemes, improving delivery of public services like the MGNREGA, financial inclusion by reaching the unbanked, effective governance, negate security threats as well as make available a multitude of services across the country. With the UID project, concepts like micro-ATMs can also be a big thrust in banking the unbanked. Government demand for micro-ATMs and hand-held devices for financial inclusion will only further strengthen the innovation climate in India. With a target of issuing Aadhaar numbers to 600 million people by 2014, the UID programme holds huge promise and challenges for the domestic manufacturers to contribute to the success of this project with locally designed devices and technologies. It’s been 36 years since HCL came to life, and I can proudly say that it’s one of the few companies in the world that has stayed the course for more than three decades. The company has been propelled by innovation and has been relentlessly investing in design, manufacturing and R&D to create products that are made-in-and-for India. For example, the hand-held device for financial inclusion is totally indigenously designed by HCL, with the hardware and the application software designed in our SEI level 5 facility, something I am passionate about and appeal to the Indian design and manufacturing industry to stay committed to.

    Expansion in demand for set-top boxes and smart meters are other such examples where government demand has led to increased focus and innovation across sectors. With the government announcing that India needs at least 100 million smart electricity meters, and entrusting the Smart Meter Task Force with the task of introducing low-cost electricity meters, there lies a huge growth opportunity for the domestic manufacturing industry. The biggest achievement of domestic players will be to enable inclusive growth by developing good quality designs and disruptive technologies locally at low costs to help such services reach out to the masses.

    I had the privilege to chair a taskforce set up by the government in 2009 with strong representations from the industry, and it’s very encouraging to finally see some of the recommendations being implemented. The key recommendations of the taskforce included the National Electronics Mission to focus on the creation of Brand India around electronics. The second was about semi-conductor manufacturing to encourage design and manufacturing in the country. Last year, the department of information technology came up with an expression of interest for the same, and a few organisations did come forward and express interest to set up semi-conductor manufacturing units in the country.

    The third recommendation, which was approved recently, was to incentivise companies that design and manufacture electronic products in India by providing preferential market access for domestically manufactured/designed electronic products. This means that 30 percent of all government procurement of electronic items is to be made from domestic manufacturers. The other two recommendations included setting up electronic clusters in the country to strengthen the country’s electronics ecosystem, and to set up an Electronic Development Fund to encourage investment. Without doubt there is a need for a sharp increase in focus on hardware and electronics riding on the electronic design capability already demonstrated by various Indian companies. In fact, a basic step of renaming the Department if IT to Department of Electronics and IT can boost confidence and can get back much-needed attention to electronics.

    According to industry estimates, India’s electronics import bill will exceed that of oil by 2020. Hence, there is an urgent need to create an ecosystem fostering domestic manufacturing. Given the right impetus, the scale and the unique requirements of this market, India can make it very attractive for players to invest in the Indian electronics system design and manufacturing industry. With government demand rising through projects like Aadhaar, financial inclusion and Aakash, and steps like preferential access to domestic manufacturers, we will not just be able to spur domestic innovation, but position India as a design and innovation leader on the global stage.

    – This article has been authored by Ajai Chowdhry, founder, HCL and chairman, HCL Infosystems, and it appeared in the April 03,2012 edition of the Financial Express.

    Revamping India's electronics industry -
     
  9. nrj

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    Desi boys of telecom manufacturing

    Indian telecom gear manufacturers are betting on 4G to take on the MNC big boys on home turf

    When it comes to buying telecom equipment, mobile companies have never thought beyond Ericsson, Nokia Siemens, Huawei and a few other foreign vendors. Indian equipment manufacturers such as Tejas, Kaveri, Vihaan were never in the reckoning and rarely featured in any big purchase deals.

    PRODUCTION WORK

    But this is about to change soon. The reason - advent of 4G technology based services. Unlike earlier mobile technologies like GSM, CDMA or 3G, fourth generation technology standards are entirely new. While the European and American tech firms have a huge lead when it comes to older technologies, 4G offers Indian players an opportunity to put their foot into the multi-billion dollar equipment market.

    Bangalore based PointRed Telecom, for instance, is planning to set up a Rs 200 crore facility to produce 4G gear. “There is a huge market opportunity in this space with the total market for such equipments expected reach at $6-7 billion over next five years from few hundred crore right now,” Mr Balaji Kulothungan, Chief Executive Officer, PointRed said.

    In addition to the core equipment, Indian gear makers are also looking at supplying back haul network gear.

    “4G will generate a lot of bandwidth and data and there has to be high speed bandwidth backhaul. Coverage is there and not too many towers are required, but what we need is backhaul,” says Mr Sanjay Nayak, Cofounder and CEO of Tejas Networks. Tejas Networks put in about Rs 100 crore last year to develop products to add to its portfolio, and is also mulling entering the wireless space PointRed Telecom that has all along been only in the wireless space is also getting into fibre backhaul. The company invested $5million on R&D for wireline technologies.

    MANUFACTURING EQUIPMENT

    Bangalore-based company Kavveri Telecom which works on Radio frequency (Rf) products and antennas required for wireless telecom is entering into embedded technology to convert its analog products to digital radiofrequency based products and this upgrade their telecom offerings.

    And the churn in the industry with companies foraying into newer domains and entering into partnerships doesn't stop with technology, but extends to new business models as well.

    Tejas Networks, for instance, works on a model where it relinquishes competition as it partners with other companies where Tejas does the R&D, build the products and sells it to them.

    The model earlier on was that the western world companies used to come to India after they made money in their home markets But according to Mr Nayak, those markets are not growing fast anymore and prices in India are a tenth of what they are elsewhere.

    “This is relevant for India because what it is driving down is that cost of innovation in India is much less than doing the same in the US or Europe.

    A lot more development will happen in such geographies provided there is talent because India has talent and there is a big home market,” Mr Nayak says.

    According to him, the next big thing in the company is the economics of how technology products require innovation. “If we leverage this, technology inflection points will come and there will be opportunities,” he says.

    PointRed also said that while the 4G technology as such is standardized, there is scope for innovation in terms of implementation. “How you implement the standards and adds value to effectively use bandwidth is where we can create intellectual property (IP),” says Koluthungan. PointRed will work on security features, networking features and authentication are some things PointRed will work on, he said.

    Considering it is a new technology, Indian companies will be fighting out with international giants to win IPR, but that apart, Indian companies are confident of winning against competition. “This won't bring about any change in the competition scene- it will be just as good or as bad as before,” Koluthungan said.

    TOTAL SOLUTIONS

    Kavveri Telecom on the other hand believes that its wider service offerings will help it beat competition. “Our biggest advantage in competing with International firms is that we provide total solutions to the customers instead of selling products and this has really put us way ahead of the competition,” Mr Shivakumar Reddy, MD - Kavveri Telecom said.

    But can the desi manufacturers give a fight to the likes of Ericsson and Nokia Siemens. “Indian companies have lagged behind in terms of IP for technology, and one can't say whether it will suddenly change today,” Ernst & Young analyst Akshay Grover said, adding that it was because a lot of investment in R&D will have to go in to create IP before a product is launched. Another concern, he said, was that of scale and volume economics and whether Indian companies would able to deliver volumes like that of international ones. “There is also a challenge of winning customers' trust,” he pointed out.

    Unfortunately, despite a large user base at home and abundant intellectual talent, India doesn't have as many product companies as it should, to cash in on these opportunities, according to experts. Venture funding and R&D investment are part of the problem but the sore point seems to be government policies.

    While the Government, to promote domestic manufacturing, has come up with policies incentivising companies that purchase India-made telecom equipment gear, TEMA believes that it won't solve the problem. Mr Ashok K. Aggarwal, Honorary Director General, Telecom Equipment Manufacturers Association (TEMA) told eWorld that while the Preferential Market Access (PMA) under the National Telecom Policy would help Indian telecom equipment companies, the policy, in its present stage wouldn't benefit Indian companies.

    While telecom companies like Tejas Networks and Kavveri telecom believe that the policy would do them good, TEMA says that changes are in order.

    For instance, the policy gives incentives to ‘domestically manufactured products', but the definition of domestically manufactured product has to be first adopted properly so that the benefit accrues to domestic products, he pointed out. Breaking the nexus between dominant Indian players and foreign ones, and thwarting lobbying would help, he added. “Indian manufacturers would be able to overcome all these and come out as winners in the end, if Government of India takes up this wakeup call effectively,” he added.

    Yet, the spirits of Indian telecom manufacturers aren't dampened and they are on a high, for, they are finally on the global map. And clearly, going by the fierce investments they're making on the technology, this is just the beginning.


    Business Line : Features / eWorld : Desi boys of telecom manufacturing
     
  11. nrj

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    Govt seeks inputs on plan to boost electronics industry

    Changes to proposal include a sharp lowering in the proposed investment threshold

    New Delhi: The government has sought comments on a revised incentive plan aimed at giving the country’s electronics industry a boost that’s expected to make it globally competitive. The changes to the proposal include investor-friendly measures such as a sharp lowering in the proposed investment threshold.

    This follows Cabinet approval in July for a Rs.10,000 crore incentive package under the so-called Modified Special Incentive Package Scheme (M-SIPS) for makers of electronics products and components.

    The draft guidelines of the policy are being circulated for stakeholder consultation, said a senior department of electronics and information technology official.

    The “policy should be finalized and notified by October this year”, he said. “The policy would be valid for three years, while the incentives will be for a period of 10 years,” said the official who didn’t want to be identified.

    Mint has reviewed a copy of the draft guidelines.

    India’s electronics manufacturing industry is projected to grow at an annual pace of 22% to $125 billion (Rs.6.8 trillion) by 2014 and $400 billion by 2020, according to government estimates.

    If local manufacturing is not incentivized, India’s cost of importing electronics may exceed its crude import bill—$300 billion by 2020.

    India is aiming for electronics manufacturing revenue of around $400 billion by 2020 from investment of around $100 billion, according to the National Electronics Policy 2011, as part of which the government announced the measures aimed at reducing the dependence on imports.

    The guidelines show that the government is serious about attracting investment in the electronics space, said industry experts.

    The M-SIPS scheme is the modified version of a policy announced in 2007 that failed to get off the ground despite the government having received 26 project proposals involving a total investment of Rs.2.29 trillion.

    Under the modified policy, companies that invest in special economic zones (SEZs), export-oriented industrial enclaves, will get a 20% subsidy on capital expenditure; those operating outside SEZs will get 25% support.

    “Most of the problematic clauses in the earlier version have been done away with,” said an official at a consultancy firm that has been playing an advisory role in the area of electronics manufacturing.

    A key change in the new policy is the low investment floor mandated for various units. The minimum limit for setting up an assembly test mark packaging (ATMP) facility in the earlier policy was Rs.1,000 crore, which was a deterrent. The proposed minimum investment is now Rs.1 crore for manufacturing items such as mobile accessories (batteries, chargers, etc.). The upper limit is Rs.5,000 crore for memory fabrication units.

    While the investment thresholds are low, “they are also more in line with what the investments should be in manufacturing units for different products generally”, said the consultant cited above. “The policy is also very broad based, which means that a wider range of segments can be covered by the policy.”

    The companies may have the option of declaring financial closure of the project in stages, and avail themselves of the subsidy accordingly, said the government official cited above.

    “Some of them are large projects and it is not necessary that a company can tie up all the financing at once,” the official said. “This proposal can help them build the units in phases.”

    Under the earlier policy, companies such as Sterlite Industries (India) Ltd, Moser Baer Photovoltaic Ltd, Tata BP Solar India Ltd, PV Technologies India Ltd and KSK Surya Photovoltaic Venture Pvt. Ltd had proposed setting up units. Most of the projects floundered because of the global economic crisis of 2008.

    While the amended policy proposals have been well received by the industry, the window during which the subsidy can be applied for should be more than three years, said an official at a leading lobby group.

    “Some companies may have liked to invest after the policy had shown some positive results. Maybe the government should consider increasing the time frame of the policy from the existing three years to the entire twelfth plan period from 2012 to 2017,” the official said, requesting anonymity.

    Govt seeks inputs on plan to boost electronics industry - Livemint
     

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