Bosch Automotive Electronics has been the first company to submit an application under the Modified Special Incentive Package Scheme (M-SIPS), entailing an investment of about Rs 5.5 billion in automotive electronics by expanding its facilities in Bengaluru. Under M-SIPS, the government will provide subsidy for investments in capital expenditure with a limit of 20 per cent for investments in special economic zones (SEZ) and 25 per cent in non-SEZs.
Under M-SIPS, investors will get a reimbursement of countervailing duties and excise for the capital equipment needed for units set up outside a SEZ.
The incentives will be given for investments made in a project within a period of 10 years from the date of its approval.
In a conversation with Srabani Sen of Electronics Bazaar, Dr Markus Hildenbrand, managing director, Bosch Automotive Electronics India Pvt Ltd, elaborates on the company making the first application under M-SIPS, and its efforts to gear up for the demand that is going to be created in the next five years.
EB: Could you please elaborate on Bosch’s application under M-SIPS?
M-SIPS is supporting electronics manufacturing in India. In the sector of automotive electronics, we have proposed to install infrastructure that will enable us to cope with the demands in the market. This infrastructure will come up in our existing facility at Naganathapura plant off the Bengaluru-Hosur highway. Basically, we are adding new products and components to our production environment, and also expanding capacity for certain products. In the expanded facility, we will mainly produce electronics auto parts that we also make in other countries. These products and components will cater to the local needs and are for various automotive applications in cars.
EB: For this kind of initiative, what incentives are you getting from the Indian government?
We have applied for incentives from the government to address the market demand efficiently, keeping the quality of all our products intact.
The government’s move to boost electronics manufacturing is expected to create a domestic electronics manufacturing ecosystem and to fill the gap between domestic demand and supply in electronics goods. With government incentives, we would like to mainly shape the manufacturing infrastructure, build up competence in the ecosystem, create more jobs and develop skilled manpower. We plan to shape the ecosystem and make efforts towards increasing the size of the market. We are preparing to cope with the increasing demand for automotive electronics in the next five years.
EB: With the Indian government initiatives to boost electronics manufacturing and M-SIPS in place, what potential do you see for electronics manufacturing in the next five years?
The demand for electronics is already there in the market. The consumption of electronics goods in India has skyrocketed over the last decade. However, most of the electronics goods sold in India are currently imported.
More than 60 per cent of those buying from our original equipment manufacturers (OEMs) are first time buyers. This demand is coming mainly from the young generation which is educated and wants more electronics in all their products. They are ready to buy but the supply from the industry should also be steady and so we are working hard on that aspect. This is where M-SIPS is a support in terms of boosting local supplies and keeping these products affordable, since otherwise, they will have to be imported. So, we support India; this is our initiative to keep imports down to a certain extent by increasing local production and, as a result, contributing to India’s GDP. Second, whatever we do, it increases the capability of the workers, engineers and the management, over a period of time.
So M-SIPS enables us to add to the manufacturing environment and get prepared for the huge demand that will come up in the next five years. The demand will almost double in the next five years.
EB: With China being a manufacturing hub for electronics, what made Bosch choose India over it?
Currently, we hear that Chinese sourcing is increasing in cost; so India still has a cost advantage, in terms of wages. Most importantly, the ideas are coming from the Indian engineers sitting in India. So why should one go to a third country when we can contribute to the manufacturing ecosystem here where the ideas and innovations are being generated. If we keep the innovators, designers and engineers together with manufacturing, it will give us a competitive advantage. The customers also get the advantage as they will not have to bear the extra cost on transport and freight charges.
EB: Do you face any kind of limitations in doing business in India?
In my experience from 2008-2013 in India, I have not faced any such major limitations. In fact, I am quite excited about the opportunities and potential India is sitting on. Especially now, with M-SIPs in place, we can see a signal from the government in terms of dedication and speed. In a very short span of time the government has come up with major schemes and policies to boost indigenous electronics manufacturing. But certainly the investments have to come from the companies, as without investment, there will be no funding and no subsidies. So those who want to start and put their efforts into the country, will get their pay-back.
EB: Any suggestions that you would like to give to the Indian manufacturers?
Every country has its own capabilities and uniqueness. Bosch has come to India for a long term relationship. We are here to learn from India. A lot of ideas come from India, which we Germans would like to understand. However, Indians and Germans have the synergy in terms of the experience and legacy that Indian and Germans have in electronics and technology, and how to make products with local ideas. I think, we should work together until success is achieved and success does not come suddenly. Hence we need to overcome the challenges, and keep things going and look forward to long term achievements rather than quick successes.
