into a more sophisticated one and geared towards developing |
China ’ s case . For example , inland transportation and handling , |
scientific acumen in the field . Many national projects like |
and ports and terminal handling account for only 37.9 percent |
Golden Projects , 909 semiconductor manufacturing projects , |
of China ’ s cost of exports . In India , these account for 53.4 |
air traffic control system project , etc . have been instrumental in |
percent of the total cost . The total logistic related costs |
driving the electronics industry towards higher growth path . |
amount to a mere USD 235 per container in China . In absolute |
China ’ s success in achieving the goals of its five year plans is |
value terms , the total logistic related costs amount to US $ 625 |
reflected in the country becoming the largest producer in the |
per container in India . |
world in many electronic categories and also achieving a net |
In its Twelfth Five Year Plan ( 2011 – 2015 ), China introduced |
exporter status by the Eighth Five Year Plan . |
several preferential taxes , and fiscal and procurement policies , |
A broad comparison of the policies specific to the electronics |
designed to develop seven Strategic Emerging Industries |
sector followed in China and India is given as Annexure D . |
( SEIs ). These SEIs are to become the backbone of the country ’ s |
An analysis of the policies in China brings out that China has a |
economy in the coming years . China ’ s IT industry ( which |
mature ESDM eco-system both for components and finished |
includes electronics industry ) has been chosen as one of these |
goods . It offers the advantage of economies of scale that make |
SEIs . |
the total cost of manufacturing much lower compared to India . |
In terms of its manufacture of electronics , China planned to |
Chinese Government has made significant investments to |
enhance its global competitiveness by optimizing the industry |
develop local supply chain to support major manufacturers . |
structure , eliminate its outdated production capacity and |
Since the components are locally available and the raw |
improve its indigenous innovation capability over the next five |
material inventory-carrying cycle is negligible due to the |
years . To achieve this , the Government planned to invest |
country ’ s ESDM ecosystem , the costs to the manufacturers are |
heavily in science and technology R & D to bring about key |
reduced . On the infrastructure front , the two fundamental |
breakthroughs in targeted technology sub-sectors including |
requirements – real estate and power – are available to the |
core electronic devices , integrated circuits and |
manufacturers at a substantially lower cost . |
nanotechnology . |
China also provides a more favourable environment in terms of |
The Twelfth Five Year Plan targeted the following structural |
ease of doing business compared to India . For instance : |
adjustments in the electronics industry : |
Registration of property : It takes only 29 days in China and costs |
► Increased R & D levels |
3.6 % of the property value . In India , it takes 44 days and costs |
► Enhanced product development capabilities , e . g ., in |
7 % of the property value . |
hardware and software designs |
Tax structure : China ’ s tax structure is also relatively simplified as |
► Development of high-end / upstream supply chain |
|
compared to India . More number of taxes requires greater
interaction between businesses and tax collecting agencies , and complicates the process . In this regard , a total of 7
payments are required in China ’ s case . As against this , a total of 33 payments are required in India .
|
The main incentive that the Government offered to new high- tech enterprises was a 15 % preferential corporate tax rate . In addition , there a geographic-based incentive for new high- tech organizations that offered a two-year tax holiday , followed by three years when tax would be levied at a 12.5 % rate . This |
Trading across borders : China ’ s cost to export and import is |
incentive was in addition to the 15 % preferential rate that |
almost half of that in India . The number of documents required |
applies to all new high-tech companies . |
for exporting / importing into the country is also lesser in | |
Higher cost of finance |
Ÿ |
Electronics Development Fund ( EDF ) to resolve unavailability of adequate risk capital through venture funds It will have daughter funds with equity exposure of 25-100 % and will contribute up to 20 % to VC funds invited to invest in startups |
Ÿ |
Increased composite cap of foreign exchange : raised to 49 % from the current level of 27 %, with full Indian management and control , through the FIPB route for strategic electronics |