India Electronics and Semiconductor Association (IESA) Presents their Budget Recommendations to the Government

IESA, the premier trade body, representing the Indian Electronic System Design and Manufacturing (ESDM) and Semiconductor industry presented their recommendation to the Government of India for the Union Budget 2013 - 14. The IESA's recommendations cover two primary areas, namely Electronic System Design & Manufacturing (ESDM) and Semiconductor Design.

"For India to achieve self-sufficiency in electronics, the Government of India needs to focus on: policies that enable India to become self-sufficient in making globally competitive electronics products. Given the talent in the country, I see no reason why India cannot become a global leader in electronics in the near future," said Dr. Satya Gupta, Chairman, India Electronics and Semiconductor Association (IESA).

"The Electronic Systems Design & Manufacturing (ESDM) industry presents a $ 400 billion opportunity by the year 2020. Semiconductor content is increasing in the Bill of Materials (BoM) of electronic products. India has emerged as one of the leading countries in the semiconductor design, with 23 of the top 25 MNCs having their design centres in here. The semiconductor design industry generated revenue s of USD 8.8 billion in the year 2011 and has witnessed a robust growth of 17.3% since the year 2009. Hence we urge the Govt of India to take proactive steps to encourage this sunrise industry," said PVG Menon, President, India Electronics and Semiconductor Association (IESA).

In their proposals relating to Electronic Systems Design & Manufacturing (ESDM), the IESA has made the following recommendations:

Encouraging domestic electronics manufacturing and product development - Building the domestic electronics industry is a very important item for national agenda, from security, self-reliance as well as future business potential. There is an urgent need to take ac tions to stimulate the domestic electronics industry and build brand India by encouraging locally designed products for local and global markets.

The proposals they have submitted includes

i)Speedy implementation of GST: Urgent implementation of GST. Rationalised indirect tax structure of 12% GST (8% Excise + 4% VAT) on the electronics manufacturing value chain.

ii)Correction of inverted duty structure: Anomalies in inverted duty structure should be removed. Import of finished electronic products should be subject to mandatory inspection and certification.

iii)Preference must be given to domestically manufactured electronics products in government purchases, to encourage local manufacturing. Aggressive targets should be set for domestic procurement, so that companies - both Indian and foreign - are encouraged to setup high-value add manufacturing units within India.

iv) Total Exemption from Service Tax for SEZ and EMC's: Total exemption from Service Tax for SEZ has been restricted to only those services rendered inside the SEZ. Services rendered outside SEZ come under the scheme of refund by the Government. In order to obtain the refund, there is a cum bersome procedure and slow process, under which one has to submit all original supporting documents to the concerned authorities. It is suggested that units in SEZ as well as the proposed Electronic Manufacturing Clusters (EMC's) be totally exempted from Service Tax.