Monday, December 08, 2014: Department of Electronics and Information Technology (DeitY) is keen on boosting electronics manufacturing in India and wants full cooperation from Ministry of Defence. DeitY wants MOD to expand the horizon of their offset policy in order to encourage domestic manufacturing in electronics sector.
DeitY’s requirements come in line with Prime Minister Narendra Modi’s ‘Make in India’ and ‘Digital India’ initiatives. The department wants that 10-15 per cent of the Defence offset requirements should be met with investment in electronics sector in the country. As per requirements by offset obligations, defence contractors need to source equivalent of 30 per cent of foreign exchange value of the contract from Indian suppliers. But now offset obligation is usually not met through any investment in the electronics sector.
As observed by Business Line, an internal note by DeitY says, electronics is a major part of Defence procurement process. That’s why a proposal has been made by the department that when electronics items are procured, 10-15 per cent of the procurement price is dedicated for electronics products or components which are used in manufacturing of a particular electronics items. According to a senior government official, contractors are mostly happy to meet offset obligations via low-end sourcing. The official added that they want when electronics items are purchased, part of the offset obligations needs to be met through electronics components only.
DeitY says if domestic electronic products are not available for a specific purpose, then the supplier needs to invest in domestic manufacturing of the product to meet the offset obligations. If the step is practically taken then it will allow small electronics component manufacturers take part in contracts with armed forces. PM Modi launched ‘Make in India’ campaign on 25 September which is expected to attract business from across the globe for further investments and manufacturing in India. The Digital India program aims to achieve net zero import of electronics items by 2020.
