SPOTLIGHT ON INDIAN ELECTRONICS Spotlight on Indian Electronics | Page 74

NET ZERO IMPORTS
Phases
Year
Products under phased manufacturing for localisation
Beneficiaries Duty Differential- Product / Component
Percentage of domestic BoM in overall BoM
Phase I
2016-17
Manufacturing of PC, Laptops, Desktops and critical Intermediary ITA goods like the Populated PCBs, Component Mounted PCBs, Motherboards, SMPS,
PC Manufacturers,
Component
Manufacturers
Phase II
2017-18
Manufacturing of LCD Monitors /
Monitor
Displays
Companies
Finished goods-PC’ s Critical components as Mother Board( Populated PCBs, Component Mounted PCB) and SMPS( 12-15 %)
LCD Monitor / Display( 14- 15 %)
12-15 %
26-30 %
Phase III
Phase IV
2018-19
Manufacturing of RAMs
Component
Add-On Cards, RAM /
Manufacturers
Memory,( 5 %)
2019-20
Manufacturing of Other
MSME
Other mechanics, Plastic
mechanics, Plastic and Metal
and Metal components &
components & and accessories as
Final Assembly( 5 %)
PC connectivity Cables
31-35 %
36-40 %
The details of BOM for laptops and PCs are given as Annexure C.
5.
Employment: It is estimated that for every million units of
With respect to the proposal for differential excise duty for
production, approximately 660 people are employed
finished goods without CENVAT credit, and with exemption for
directly by a company on the assembly side and another
components, parts, accessories and sub-assemblies of such
2640 on the component side. Thus, the increase in
products; given below are static scenarios related to the
production will result in an exponential impact on the
revenue impact for the Government of India.
employment opportunities.
Scenario 1 – Excise Duty of 2 % on domestically manufactured
Industry estimate
6. Increase in content generation and innovation: NBs and PCs are expected to continue to be the primary mode of content generation and India is expected to see a sustained demand driven by the IT industry.
B. Revenue impact for the government
Industry estimate
Targeting a 30 % global market share will result in ~ 53,000 jobs in PC assembly and ~ 2,11,000 in component manufacturing Assuming a multiplier effect of 3X1, the sector would add ~ 7,88,000 jobs to the economy
India is a design hub for most of the component suppliers
Co-location of design centers and manufacturing of NBs / PCs can help drive a virtuous innovation cycle driving sustained growth for India. finished goods with CENVAT credit of the 2 % tax to eligible B2B buyers, assuming no incremental substitution of imports by domestic production.
The table below shows that the estimated present revenue of the government on Desktops / Notebooks / Laptops being collected from manufacturers and suppliers of parts and components etc. after giving input tax credit for B2B purchases is INR 325.81 Cr. The estimated revenue expected at a concessional rate of Excise duty of 2 %( without availing CENVAT credit on inputs and capital goods) on finished products has been estimated at INR 222.57 Cr. Thus the negative revenue impact for government would be INR 103.24 Cr.
Sl.
Description
Amount( Rs. Cr)
Conversion factors
Assumptions
1
Market size( Desktops + Laptops) FY15( of which)
20,362.80
61.1
USD 3332.7 mln @ Rs.
61.1 / USD; ITOPS study
2 Sales of domestically manufactured units( B2B + B2C sales)
6,516.10
32 %
Sales of domestically
manufactured units estimated
at 32 % of total sales
3
Output tax base for B2B + B2C sales
5,212.88
80 %
Abatement of 20 % on IT
products
4
B2B sales
3,258.05
50 %
Estimated at 50 % of sales of
domestically manufactured
units
5 Output tax base for B2B sales 2,606.44 80 %
Spotlight on Indian Electronics 2016 | 74