As part of the prime minister’s ‘Make in India’ initiative, the Centre has issued strict guidelines to all ministries to give preference to domestically manufactured electronic products in government procurement.
The move has perplexed many, as a large proportion of India’s electronic goods market is accounted for by imports.
A committee of secretaries has decided all ministries and government departments should identify department-specific domestically manufactured electronic products for procurement and notify these within a fortnight. A press release by the government said all government departments had been asked to adhere to a tender template already issued by the Department of Electronics and Information Technology.
The department has been asked to put in place an online monitoring system for ministries/departments and state governments to report on procurement of electronic products. This system, to be put in place within a fortnight, will capture the break-up of domestically manufactured electronic equipment by value.
The government had launched the Make in India initiative to facilitate and foster investment in the ailing manufacturing sector.
Many within industry are wondering how the government’s latest diktat will be implemented. According to hardware industry body MAIT (Manufacturers Association of Information Technology), annual electronic imports currently stand at $16 billion.
According to government estimates, by 2020, India will import electronic goods worth $300 billion to address its overall demand of $400 billion worth of such goods. As such, India’s electronics import bill could exceed that of oil.
To cater to such huge demand, the government will have to invest in setting up semiconductor fabrication plants. The hardware and electronics sector in India is worth Rs 70,000 crore; 85 per cent of what goes into machines here comes from abroad in the form of components.
Earlier, Business Standard had reported how players hadn’t evinced much interest in setting up fab units — a complex technology project costing about Rs 25,000 crore — for which the Centre plans to give subsidy of 40 per cent. In September 2013, the government had given an in-principle approval to two consortiums in this regard. Simultaneously, it had also opened the door to others to come forward with proposals.
However, the Department of Electronics and Information Technology had received only two new proposals — one by Interactivity Group (supported by Indian Institute of Technology alumni) and the other by APSTL, an Arizona-headquartered technology firm. Though an empowered committee set up to evaluate all the proposals was to study these proposals, an official said it was unlikely that the two applications would lead to something concrete.