Doe Report Moots Opening Strategic Electronics Sector To
A confidential report of the department of electronics (DoE) has suggested opening up the strategic electronics (SE) industry to multinationals in order to meet a massive requirement of Rs 14,500 crore during the 9th plan.
This is a departure from the existing policy of reverse-engineering SE components and procuring them through third-country sources to beat Western technology control regimes for dual-use (defence and civil) components.
The SE industry consists of defence, aviation, meteorology, space, ports and vital civilian sectors like power generation and oil extraction. The eighth plan expenditure on this sector was only Rs 2,850 crore. The increasing use of precision and high-value electronics in all sectors of this industry has necessitated a massive hike of almost 500 per cent in expenditure requirements during the next five years.
The report points out that an element of secrecy has pervaded SE imports so far, leading to duplication and overpricing. Besides, many high reliability components like radiation-hardened chip sets fall under dual-use restrictions, which poses a constant threat to their supply. Opening up this industry to imports and local manufacture by multinationals would create price competitiveness, bringing down the cost, the report argues.
The report mentions the experience of several Indian importers of being overcharged by foreign companies, which claim a premium due to difficulty in delivering dual use goods.
The report also points out that opening the sector to multinationals could boost indigenous manufacturing capabilities. Besides, Indian expertise could be tapped by multinationals in some areas such as software. Indian talent could be made available to foreign firms even for theoretical work leading up to the design and development of hardware, a labour-intensive activity.
Given the high obsolescence level of the industry and the need for constant investment in research and development, the report suggests that the multinationals operating in this sector in India should be asked to earmark a part of their Indian revenues for original research in this country.
The report estimates that over 60 per cent of SE components are imported, which speaks poorly of the capabilities of local companies. The situation will not change substantially during the 9th plan unless foreign technology is brought in to beef up indigenous production.
Referring to computer-generated imagery, which is used in war gaming, simulation and as a design tool, the report has suggested the establishment of a strategic software agency under the department of electronics to coordinate the efforts of public and private agencies and companies. The agency should not concentrate only on meeting local demand, but also seek to develop export potential, the report adds.