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structure, eliminate its outdated production capacity and |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 |