“2014 should be treated as the year of ‘Made in India’ products

Monday, March 10, 2014: In an exclusive interview with Srabani Sen of Electronics Bazaar, J Satyanarayana, who will retire as secretary, Department of Electronics and Information Technology (DeitY), on April 30, spoke about the government’s renewed efforts to boost electronics manufacturing in the country.

A member of the Indian Administrative Service from the 1977 Batch (AP cadre), J Satyanarayana has been the special chief secretary in Andhra Pradesh. During his various assignments in the state, he has served as principal secretary of the health, medical and family welfare department; principal secretary for IT and communications, and CEO of the National Institute for Smart Government.

EB: You want 2014 to be declared as the year of ‘Made in India’ products. Does this need any type of Cabinet approval?

2014 should be treated as the year of ‘Made in India’ products. Wishful thinking will not take us anywhere. We need to prioritise our efforts. We must focus on manufacturing 25 top-selling electronic products in the country. These include the top 20 products sold in India currently (which, according to a Frost & Sullivan report, account for 80 per cent of the total value of the electronics consumed in India) and another five products that have a high CAGR currently. These 25 products include mobile phones, flat panel display TVs, digital cameras, LCD monitors, set-top boxes, CFLs, inverters and UPS systems, energy meters, smart cards, etc.

About 65 per cent of the current demand for electronics (US$ 57 billion in 2014) is met by imports. A computer that might appear to be ‘made in India’ is actually only assembled in India with components like hard disks, chips, memory, graphics card and the monitor imported from China, Taiwan, Malaysia or Vietnam. We need to change from assembling to manufacturing. A focus on these 25 products will help create the ecosystem and scale up manufacturing in the country.

It makes commercial and economic sense to make these products and components in India. If we are able to focus on these 20-25 products, there should be a substantial change in the electronics industry by December-end.

To make this as the year of ‘Made in India’ electronics products, we just need to take the internal approval in the Ministry of Communications and Information Technology.

EB: What, according to you, should be done to boost these 25 products with high value addition?

I have a number of suggestions to make to carry forward an action plan for the ESDM sector in 2014.

• The year 2014 may be declared as the year of ‘Made in India’ electronics products.

• Suitable communication may be sent to all associations in the ESDM sector, to make this visible through appropriate captions on packaging.

• An appropriate logo may be designed to be used in all conferences on ESDM during the year.

• The concept and the logo may be worked into the ongoing media campaign.

The following strategic shifts may be advocated consistently while going forward:

• Shifting from licensing to IP creation

• Shifting from component/circuit design to system/product design

• Shifting India’s image as an importer/assembler to that of an electronics manufacturing hub

• Shifting from policy formulation to implementation

So, I suggest that we adopt the following 8-point agenda:

• The two reports released by India Electronics & Semiconductor Association (IESA) on January 13, 2014, on the disabilities and on the product approach, may be read together and a master list of recommendations prepared.

• The Modified Special Incentives Package Scheme (MSIPS), Electronics Manufacturing Cluster (EMC) and Preferential Market Access (PMA) policies may be reviewed to incorporate the recommendations from the master list.

• Five to 10 product clusters may be identified geographically, and communications sent to the associations and states to promote the same.

• Issues relating to inverted duty structure, particularly with regard to the 25 top-selling products, may be identified, a master list prepared and a proposal sent to the Department of Revenue (DoR).

• The Electronics Development Fund (EDF) ought to be fast-tracked.

• Extant procedures for approvals/sanctions, in relation to the 25 products, may be reviewed—not only relating to DeitY but to all other related ministries/departments so as to ensure a smooth supply chain and a faster turnaround time. An inter-ministerial group (IMG) may be constituted for this purpose.

• A Focus Product Scheme (FPS) may be designed specifically for the 25 products.

• All efforts/resources of the government and industry ought to be focused on the 25 products and four components during 2014.

EB: From 2012 to August 2013, things were going very well for the electronics industry. Why did investments go down in the later part of 2013?

That is not the case—investments are still coming in. DeitY has received 25 new proposals for manufacturing in the electronics sector under the MSIPS, worth Rs 130,000 million (Rs 13,000 crore) and in-principal approvals have been given to seven clusters. Of these, DeitY has approved investments worth Rs 4360 million in the automotive electronics vertical, Rs 4060 million in the consumer electronics/handheld phones vertical and Rs 110 million in the LED lighting products vertical.

Besides, investments worth Rs 4460 million have been recommended by the appraisal committee. These investment proposals are from the strategic, automotive, industrial electronics, capacitor and set-top box sectors.

EB: Even after so many government initiatives, we are not seeing domestic manufacturing going up. What can be the reason?

While investments are coming in, it takes some time for the department to approve the projects. However, while we are making efforts to speed up the process, we have realised that it may not be possible to focus on thousands of products. That’s why we will now focus on 25 products and ensure that implementation speeds up, too.

EB: Did the PMA policy being kept on hold for some time create some kind of setback in the industry?

Earlier, the PMA policy lacked clarity. Now, with the revised policy, everything is clear and we can promote it with conviction. This policy shift has not jeopardised further investments into the sector.

EB: What gifts can we expect from the government for the electronics industry in 2014?

After putting in place policies such as the National Policy on Electronics in 2012, it is now time to implement them at the ground level so that India could become a hub for manufacturing electronic items. There are some areas for improvement in the guidelines, and we will streamline the same.

Therefore, 2014 will witness even further growth of the electronics industry in India. The government will be more focused on implementation. We will see a number of investments coming in as well.

EB: The government has decided not to extend the deadline for safety certification of imported electronic products. But there is already a backlog of 100 products awaiting certification, with more joining the queue.

The government had extended the earlier deadline to July 3, 2013, and then again to January 3, 2014. The original deadline was April 2013. Registration is a continuous process and whenever there are new products introduced, there will be fresh applications for registration. We have to close the deadline, as we did on January 3, 2014, as there will be some queue of products at labs. We are hoping to get them cleared soon. The companies that have already sent their applications earlier can keep sending their products for registration. The processes are being improved to clear applications faster. The basic idea is to get better quality products. There is no problem in the BIS labs and we are working on improving the procedures, such as allowing registration of the products online.

EB: What is the status of the project to set up a grid of dozens of supercomputers across India’s finest educational and research institutions, beginning this year?

The project is in its advanced stages and is expected to start this year. Our actional plan for this year includes the Supercomputing Mission. This project will equip research and educational institutions with supercomputing power. At present, institutions doing research work have to ask for computing power from the Centre for Development of Advanced Computing (CDAC) or the Indian Institute of Science in Bengaluru. With the proposed grid, computing power will be available to them all the time, so that research output can go up manifold.

EB: What are the latest developments on the two chip manufacturing facilities?

Pursuant to the ‘in-principle’ approval accorded to two fab proposals by the Union Government in September’ 13, DeitY has taken speedy next steps. These proposals are at an advanced stage of processing in Government.

EB: According to MAIT, a number of PC manufacturing facilities in India are expected to close down. What are your comments on this?

PC manufacturing has taken a back seat primarily because demand and usage is reducing significantly with the advent of tablets and other handheld smart devices.

EB: Why aren’t we doing something about the tax regime, which is not industry-friendly?

We take this up with the revenue department all the time. We need to simplify our tax structure. One needs to understand that the fast pace at which technology changes creates its own problems. We have suggested that there should be a joint working group that will enable the various sector-specific departments and ministries to apprise the revenue department about the continuous and fast changes in technology so that corrective steps can be taken.