Other sectors may also get special incentive in Budget

Soon, makers of consumer appliances, optical fibres, smart cards, etc, might be able to avail of the government's subsidy scheme for manufacturing products in the country.

Under the 'Make in India' initiative, the Department of Information Technology and Communications plans to extend the Modified Special Incentive scheme, through which the government offers subsidy for capital expenditure - 20 per cent for investment in special economic zones (SEZs) and 25 per cent in non-SEZs. The new sectors to be included are consumer appliances, optical fibres, smart cards, electronic product designs, raw materials for electronic products, capital equipment for electronics manufacturing, etc, sources say.

Incentives under the scheme are provided on a 10-year basis; the current policy will expire in July this year. It has been proposed this be expended to 2020 and the incentives be allowed from the date of submission of an application. An announcement to this effect might be made in the coming Budget.

Till January this year, 47 applications had been received in this regard, accounting for investment of Rs 16,602 crore. Of these, 29 have been approved (Rs 4,416 crore of investment); the rest are being appraised.

The companies that have come up with investment proposals include GE, Bosch, Nidec, Continental, Motherson Sumi, Calsonic Kansei, Tissol, Tata SED, Tejas and Panasonic.

Currently, such incentives are available for 29 categories of electronics, systems, design and manufacturing products, including telecom, information technology, hardware, consumer electronics, medical electronics, automotive electronics, solar photovoltaic, LEDs, LCDs, strategic electronics, industrial electronics, nano-electronics and semiconductor chips.

The government also provides for reimbursement of countervailing duty/excise for capital equipment for non-SEZ units. For a few high-technology and high-capital investments, reimbursement of central taxes and duties such as customs duty, service tax and excise duty is also provided.

The overall financial ceiling under the modified special incentive package scheme is Rs 10,000 crore during the 12th five-year Plan, according to a government statement. In 2013-14, India imported telecom products worth Rs 69,516 crore, while the export of such items stood at Rs 20,475 crore, a significant deficit of Rs 49,041.20 crore.