In the above example , we see that the net gain to PC |
Increased domestic production would result in additional |
manufacturer ( or reduction in revenue cost to the government ) |
domestic value added , which in turn would yield additional |
due to introduction of a differential duty regime for PCs is |
income and consumption tax revenues to the governments . |
reduced marginally from 10.5 % to 10.2 % due to the |
These so called multiplier effects ( i . e ., additional value added |
simultaneous introduction of a differential duty regime for |
in the economy ) would vary in the short term and long term . |
some key components . Such reduction in revenue cost for the |
In the short term , there would be substitution of domestically |
government will also be accompanied with greater value |
assembled / manufactured finished products for imports , with |
addition and job creation within the country . In due course of |
no increase in the domestic production of components and |
time , as economies of scale are built up , the differential duty |
parts . The quantum of additional value added from such |
regime could be extended to more components , encouraging |
substitution would be modest , as assembling of imported |
further value addition and job creation within India . |
products generates domestic value addition of only 5.5 % of |
Positive revenue impact of multiplier effects |
total output value of finished products . The value addition ( and |
The degree of substitution of domestic products for imports |
the resulting multiplier effects ) would be much larger if the |
could vary depending on the nature of competition between |
policy measures also result in increased domestic production of |
the two . It would be unrealistic to assume that domestic |
components and parts . |
manufacturers would be able to capture 100 % of the domestic |
The short-term improvement in value addition is estimated to |
market . For illustrative purposes , we have shown revenue cost |
be modest , even assuming that imports of finished products |
assuming there is 100 % reduction in imports . |
are reduced to zero . The longer term improvement in value |
A limited survey of major producers in the country suggests |
addition would be much larger . |
that they do have substantial unutilized capacity , and would be |
The table below provides some possible scenarios in terms of |
able to ramp up production very quickly to at least double their |
additional employment , income and tax revenue generation . |
share in the domestic market . |
DEMAND |
|||||||
Total demand ( est .) |
Mln nos . |
10.60 |
11.21 |
12.33 |
14.80 |
17.76 |
21.31 |
Employment multiplier for |
No . |
2 |
2 |
3 |
3 |
4 |
4 |
component mfg . |
|||||||
Total employment ( est .) |
Nos . |
4,935 |
5,292 |
16,227 |
38,944 |
46,733 |
56,079 |