[huntrz]

If we check the country of origin for televisions today listed on ecommerce sites all are manufactured/assembled in India and almost all laptops are originating from China. If it can be achieved for TVs then I don't think why can't it be achieved for Laptops. Once assemblimg starts manufacturing will follow and not to mention the employment opportunities it would bring.

[Hayek]

Originally Posted by GTO

I am a big fan of the "if you want to sell here, build here" philosophy. I have always supported the local manufacturing of cars

A terrible philosophy which is incorrect even for consumer goods like cars and TVs but far worse for computers and tech products. Duties on cars have created an industry which produces unsafe products which kill Indians and cannot sell anywhere else in the world - except if like VW or Ford, you overestimated demand here and try to make the best of a bad deal.

How many people does Foxconn employ? How many people would it take to merely "collect" that customs duty?

Merely counting customs duty doesn't build local talent, local supply chains or create tens of thousands of local jobs.

Firstly computers are plant and machinery for our only globally competitive industry. Secondly, in an industry where margins are typically 5%, even a 10% duty offers the opportunity to treble margins if you could produce efficiently here. If people don’t invest with that kind of duty, it shows that our costs are at least 10% higher than than those elsewhere. Licensing is infinite duty / viz with the assumption that even a 25% or higher duty is not enough to make us competitive. All this creates is disguised unemployment which is bad enough in consumer sectors with limited second order effects.

But hurting Indian tech is killing the goose that has laid the golden eggs that give all of us the belief that we are great.

By that reasoning, we should stop manufacturing cars (5 - 10% margin), open up the import gates and be happy with a 20% customs duty on all imports.

20% is too high in my view but it would be better than where we are now.

[buzzy_boy]

We've tried protectionism in the past, and failed. So, it is certainly a surprising move for a government which cares a lot about ease of doing business.

What I'd really like to see is the highest bureaucratic authority behind this decision come out in the open and explain the rationale with hard cold data. The media houses should enable these types of dialogues more often, and hold the executive accountable.

We can't afford to rely on the whims and fancies of our bureaucrats anymore.

If this is a well thought out policy, any reasonable citizen will subscribe to it.

[1.2TSI7DSG]

Originally Posted by shankar.balan

How then does one buy Apple Products and all which are not made in India?
Anyway there is a significant duty that we are paying here in India.

Flying to Dubai/Singapore with a shopping list will be cheaper

[Beta_Blocker]

Originally Posted by Hayek

Duties on cars have created an industry which produces unsafe products which kill Indians and cannot sell anywhere else in the world

Please correct me if I’m wrong.

If structurally unsafe cars are available with many bling features like sunroof, premium audio systems, ambient lighting etc, aren’t consumer preferences to be blamed instead of Duties- which are same for these bling features as well

Originally Posted by Hayek

Secondly, in an industry where margins are typically 5%, even a 10% duty offers the opportunity to treble margins if you could produce efficiently here. If people don’t invest with that kind of duty, it shows that our costs are at least 10% higher than than those elsewhere.

It can be true that we are not very efficient in manufacturing or assembling yet, that’s why incentives are being provided to set them up initially. I believe we are not targeting the 5-10% margins, instead we are targeting the major chunk of remaining 90-95%, which when flows into our economy gives a good boost.

[SmartCat]

Originally Posted by buzzy_boy

We've tried protectionism in the past, and failed.

There is a huge difference between protectionism of the past and what we see now.

In the past:

- Car/scooter imports were not allowed
- Foreign automobile makers were not allowed to setup a factory in India

So the consumers had a choice of Ambassador/Padmini and scooters from Bajaj. That was protectionism because Indian companies were favored and consumers were given short end of the stick.

What we see now:

- Car/bike imports are still not allowed
- All car/bike manufacturers (except from China) are welcomed and given incentives in the form of land/tax breaks to build cars in India

Now the consumers have one of widest array of cars and bikes to choose from, across a wide price range. Sure, cars sold in India are expensive, but it is not because they are manufactured in India. They are expensive because of the taxes.

So what we see in India is NOT protectionism because Indian companies are not favored in any way. Ditto with our policies on smartphones/TVs etc. Micromax/Lava etc are not favored in any way and consumers still get a wide choice of options from international brands across a wide price range.

If you do not force the hand of the OEMs using carrot and stick policy, they will merrily utilize excess capacity in other nations to send goods to India. After all, it is a pain (risk) to invest and setup a new factory in a new country.

[SupMeteorStorme]

Welcome move by the government to nudge reluctant tech manufacturers to build our nascent tech manufacturing sector. This is like telling someone, "if you want to host a party in my hotel, you'll have to employ my staff for the party", isn't it.

In the short term, consumers will crib about this. In the medium term, there should be investment by industry majors and incentives by government to them, and then in the long term we should hopefully see a robust manufacturing industry take shape in India.

[baarish84]

We as a country need to take such measures, if we want to take advantage of global headwinds such as "China plus one" pivot of the global west.

We need OEMs setting up manufacturing in India, because service dominant economy has its limitations. Many countries are threatening India's position as global service hub, as service industry has extremely low entry barrier .

Manufacturing sector also holds key for multidimensional employment creation - as auxiliary supplier ecosystem builts up around anchor industries.

Our workforce is still young, we are on path to improve basic infrastructure for industrialization (roads, electrification, ports etc) . Such somewhat restrictive policy measures are next logical step to signal OEMs , that they need to raise their game if they want to cater to largest populated country in the world.

[FocusAssist]

I come from a hardware product background. Building electronics is really tough here in India. Govt slaps a 40% duty on every small component that is imported (ICs, PCB components).
Talking about mechanical, again, things become very hard when you start expecting high quality stuff. But once big players start demanding high quality stuff, the vendors have to comply. Its a cultural shift that needs to occur and I think someone in the govt has thought about it that local manufacturing will solve this starting with assembly.

Look at M&M from 20 yrs ago and look at XUV700. Its leaps and bounds ahead now. Had they not made manufacturing in India cost effective, we wouldn't have got amazing local manufacturers. Someone mentioned about vehicle safety - guess what, the top safest cars (according to GNCAP) are either Indian manufacturers or platforms built specifically for India.

Fingers crossed that something same will happen in Electronics hardware 10-15 yrs down the line.

[Samurai]

If one thought import/export is easy now, think again. Even export is rife with too much paperwork, even if there is nothing physical to ship. India is a software export powerhouse, so it all should be smooth, right? It ain't.

For exporting software or software services, following is the process:

1) Register with Software Technology Parks of India. It doesn't matter if you are working in a STP or outside of it, or in your home. This is one time, but to be renewed every 3 years. You also need Import Export Certificate (IEC), LUT (sales tax waiver) beforehand, each needs to be renewed every year.
[Steps for every invoice transaction]
2) Ensure you have a contract or purchase order with a foreign customer or entity.
3) Invoice the customer for the product or service, mentioning the IEC and LUT.
4) Record the contract/PO at the STPI portal.
5) Collect the FIRC (Foreign Inward Remittance Certificate) from the bank once you received the payment from abroad. Ensure that the sender specifies the remittance purpose code as P0807 - Offsite software export. That should reflect in the FIRC. This also results in an entry in RBI's EDPMS database. It is the exporter duty to clear this entry from the EDPMS database. If this code is missed, it is a big circus to fix it.
6) Apply for SoftEX (software export) approval by submitting the invoice against the PO at the STPI portal. You also need to submit the broadband invoice of the location where you did the export from. You need to mention all the details of the software you exported, along with price and currency. Fortunately, it is all online now thanks to digital certificates. It was lot harder earlier with hard copies.
7) Once the STPI certifies the SoftEX application, submit it along with the FIRC and invoice and STPI registration certificate to the RBI through your forex authorised dealer (your bank). Once approved, it will clear your payment from the EDPMS database. Congrats, you finally completed one export transaction.

Then there is monthly performance report (MPR) you need to submit to STPI. Not to forget APR, the annual performance report endorsed by your CA.

After seeing all this, I have never dared to do import despite having IEC. I ain't that brave.

[nirmaljusdoit]

All is well and fine with the intention of making India as a manufacturing base, but are we really manufacturing or just assembling in India?

With the example of the mobile phone industry, as far as I know most of the components continue to be imported and just assembled here. It could be a very high value in terms of exports but how much it is actually adding value to our local economy? Do we have a visibility of technology parts like displays, chips, motherboard etc being made here from scratch

Would be interesting to see actual hardcore figures?

[safari_lover]

Originally Posted by Hayek

A terrible philosophy which is incorrect even for consumer goods like cars and TVs but far worse for computers and tech products. Duties on cars have created an industry which produces unsafe products which kill Indians and cannot sell anywhere else in the world - except if like VW or Ford, you overestimated demand here and try to make the best of a bad deal.

Are the iPhones assembled in India are any lesser in quality compared to those assembled elsewhere?

One can argue that it's just assembly and cannot be called manufacturing as most of the components are still imported. But that's changing too. There are reports of companies setting up components factories here in India.

The govt is taking the same route for computers now and expecting similar results. Good move.

[buzzy_boy]

Originally Posted by SmartCat

If you do not force the hand of the OEMs using carrot and stick policy, they will merrily utilize excess capacity in other nations to send goods to India. After all, it is a pain (risk) to invest and setup a new factory in a new country.

I think you have a fair point. But there are other questions. For example:

1. Computer hardware manufacturing is a heavily automated process. It is unclear how many jobs will be added.
2. At least for the medium term, it's going to be relatively more expensive to manufacture laptops in India. Laptops are elastic goods, so we could expect a medium term drop in sales. That'll likely have a detrimental impact on everyone from showrooms to repair professionals - in the medium term.

One could argue that both of these costs will yield benefits in the longer run.

My point is, show me the numbers. Show me the cost/benefit modelling. And I want to hear it directly from the horse's (decision makers) mouth. Else, all of these are mere speculations.

[Turbohead]

All said and done, whether forced manufacturing is good for the economy or not, I still don't agree with how the govt implements all these rules - why do you kick the groin and then insist on groin guards instead of keeping a deadline for wearing one and then kick those who don't have one? It's not just electronics but it also includes banning diesels and hurried implementation of E20 spec fuel when no one is really ready. Why does everything have to be so immediate without giving a heads up? In this case, nobody will be attracted to invest or run companies in India in the long term.
Sorry for being so raw.

[GoBabyGo]

Originally Posted by androdev

What happened in the case of tyre manufacturing? To me, it looks like a lot of budget category tyre manufacturing is taking place in India since the implementation of import restrictions on tyres. Maybe something similar will happen here as well. A large ambitious country has got to take some tough policy decisions to promote local manufacturing - can't afford to depend on imports.

Some favoured businesses taking advantage of this policy - that problem is not going away anytime soon and can't be the reason to stop promoting local manufacturing. In general, I think there is an overall theme of arm twisting companies to take up local manufacturing across industries and it augurs well for the country in the very long run.

Hi, I will be happy if India go instead of "Made in India" to "Made by India". India need reform for MSME, intensive training to youth, huge PLI & tax benefits to MSME to create "Made by India" products. China followed this from 90's (in my view). If my reading is correct Apple started selling iPhone in China in 2009 and Xiaomi launched their first product in China in 2011. It took just 2 years for China to copy iPhone and develop their own world class mobile phone. In 2014 Xiaomi entered in India and captured Indian mobile handset market. Chinese manufacturers collectively still hold significant market share in India. India still unable to produce a decent quality phone forget world class. This problem is in almost every industry. International companies set up their facilities in India, employee Indian and produce world class products, whereas Indian manufacturers failed to do this.

I have heard that many "Made in India' labelled products are import from China with label Made in India.

India is a 142 crore population country. We need 1000s of MSME who employee large number of people, therefore, govt push for MSME is more important than generating business for handful of already established friends & donors. This may work for countries which have lesser population and higher per capita income, but India need medium & small scale industries.