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