The IT and electronics ministry will take a reworked flagship incentive scheme for electronics manufacturing to the Cabinet for approval in the next few days, with an aim to boost local production.
IT Secretary Aruna Sundararajan mentioned that they are reworking on MSIPS (Modified Special Incentive Package Scheme) that has to go to the Cabinet in next few days with an objective to fast-forward investments and incentives, simplify disbursement and also to rationalize categories.
M-SIPS (Modified Special Incentive Package Scheme) was launched in July 2012 for a three-year period and was revised to include white goods manufacturers and was extended till 2020.
The revised policy likely to come within a week, is aimed to accelerate investments in the country and simplify the disbursement process for the companies setting up units under the scheme.
Sundarajan said that ease of doing business and stable fiscal regime which the Goods & Services Tax (GST) would bring, would make India an overall attractive place for manufacturing. Meanwhile, a study by advisory firm Ernst & Young (EY) released Monday suggested that the mobile handset sector should be incentivized for local value-addition under the GST regime which can further propel Centre’s ambitious Make in India initiative.
The study by US-based consultancy EY, together with Broadband India Forum (BIF), suggested that benefits provided to handset makers under the current dispensation should be extended to component manufacturing, in order to bring additional investment into the country. In fact, incentives can be given according to the local value addition done by a company, as per a proposed formula.
A recent IIM-Counterpoint finding puts local value addition at 6 per cent and estimated that it could go up to 32 per cent by 2020 after bringing most of the manufacturing processes locally.
Handset industry’s growth faces uncertainty as the GST regime would do away with the current duty differential that mobile handsets makers avail. E&Y has proposed that under GST, incentives can be multiplied by a factor such that the total incentive is equivalent to the one currently available.
By Baishakhi Dutta
