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  IESA WINWire June 10, 2017 - June 16, 2017 for Subscription click here  
12th Anniversary

Implications of GST Bill and Electronics Manufacturing in India
Source: BW CIO World; June 12, 2017

Ashwini K Aggarwal, Chairman, India Electronics and Semiconductors Association (IESA) talks about the implications of the new GST bill and how GST would have a positive impact on the electronics manufacturing, He feels that the domestic manufacturing of electronics is on the rise led by mobile phones.

Ashwini K Aggarwal: It has been an exciting journey of more than three decades in IT and ESDM sector. Initial exposure to global marketing initiatives at HP were crowned with an industry accolade of the most favoured manager in the industry in 2006.

I have been exposed to an intoxicating exposure to R&D and manufacturing ecosystem in the nanotechnology to end-device ESDM ecosystem spectrum over the last decade. Imagine working with the industry to map the entire solar supply-chain, estimating demand in a virgin market at different levels of the supply-chain and mapping manufacturing enablers for India’s solar vision.

Imagine working with academia to create cutting edge R&D projects for energy storage, sensors and flexible electronics...Imagine creating the next generation engine for successful startups in ESDM space. Imagine working on enablement of ultra-mega projects in solar, display and semiconductors (projects that are conceived with capex of Rs. 17-20000 crores investments).

We are at an interesting turning point in the Indian ESDM journey...there are visible green shoots of manufacturing and with the results of ease-of-business actions in the government and path-breaking policies...we can expect our local manufacturing industry is going to break out of the cocoon and take it’s legitimate space in the global markets.

Ravi Shankar Prasad to discuss digital economy with industry leaders on June 16
Source:; June 12, 2017

The IT Ministry will discuss with industry leaders on June 16 ways to expedite formulation of a roadmap to make India a USD 1 trillion digital economy as soon as possible besides planning the next phase of growth.

The ministry has received confirmation from about 20 leaders including Infosys co-founder S Gopalakrishnan, Wipro Chief Strategy officer Rishad Premji, Nasscom President R Chandrasekhar, NIIT Group chairman Rajendra Powar, Flipkart founder Sachin Bansal, Lava CMD Hari Om Rai, Google India VP Rajan Anandan and Tech Mahindra CEO CP Gurnani.

"We are looking for ideas from thought leaders to make India an USD 1 trillion digital economy as soon as we can by empowering people at the bottom of the pyramid. USD 1 trillion is not the limit but a milestone," Ministry of Electronics and IT Additional Secretary Ajay Kumar told reporters here.

He said that at present India is around USD 450 billion digital economy and at existing growth rate it is expected to be USD 1 trillion in next 7 years.

As of now, the Indian electronics market is estimated to be around USD 100 billion, IT sector USD 150 billion, telecom USD 150 billion, e-commerce USD 30-40 billion and rest is estimated to be size of shared economy like taxi hailing services, start-ups etc." We have called representatives from all segments of digital economy.

Indian electronics market expected to reach $400 billion by 2020: ASSOCHAM-NEC study
Source: ET Telecom; June 12, 2017

Indian electronics market is expected to reach $400 billion by 2020 at a compound annual growth rate (CAGR) rate of 41% during 2017-2020, according to a joint study by ASSOCHAM and NEC.

The domestic production is currently growing at a CAGR of 27% and is expected to touch USD 104 billion leaving a gap for import to the extent of USD 300 billion.

The study reported that the Indian electronics and hardware market grew by 8.6% YoY to reach USD 75 billion in 2015 which was mainly driven by the rise in local demand. The worldwide electronics industry had a worth of around USD 1.86 trillion in 2015.

The study also suggested that the electronics industry is the largest and fastest growing industry in the world. India has a share of about 1.5 per cent in the world in electronic hardware production with total electronics hardware production 2014-15 being at USD 32.46 billion.

The domestic consumption of electronic hardware in 2014-15 was USD 63.6 billion out of which 58% was fulfilled with imports, noted the study.

Electronic manufacturing in India is worth $100 billion at present, IT Minister Ravi Shankar Prasad said recently at an event.

Mobile manufacturing in India increased to Rs 54000 crore in 2015-2016 and is likely to exceed Rs 90000 crore by the end of this year, according to official data. "When our government had come, we had investment of only Rs 11000 crore in the electronic sector which is now at Rs 153000 crore," told the IT Minister.

Why private defence manufacturing in India needs to take off
Source: Hindustan Times; June 12, 2017

The government has recently unveiled the long-awaited ‘Strategic Partnership’ policy for defence production. This policy is aimed at creating and nurturing an ecosystem for private defence manufacturing in India. The government has all along insisted that the defence industry would be a centrepiece of Make in India. Strategic partnerships with select Indian firms have long been regarded as essential to enabling significant private sector participation in defence manufacturing. Over a decade ago, a committee led by Vijay Kelkar recommended that the government should identify certain firms based on their technical, managerial and financial strength as ‘champions’ or ‘Raksha Udyog Ratna’ and circulate tenders for major systems to these firms. A subsequent committee was constituted led by Probir Sengupta identified 13 Indian firms that could be designated along these lines.

But the government of the day baulked at the thought of being seen as favouring some companies over others. This concern was overblown and it effectively stymied private sector participation in defence. Although the NDA government has taken its time to approve the policy, it has done well in thinking through its underlying rationale as well as the practical steps needed to unleash the Indian private sector in this critical domain. Nevertheless, there are some lingering problems that the government will need to address as it moves along.

500 Startups to make 10-12 investments in Indian startups in 2017
Source: ET Tech; June 13, 2017

Silicon Valley-based venture capital fund and accelerator 500 Startups is on track to make 10-12 investments in Indian startups this year after a lull in 2016, with some of its global micro funds having started making investments in the country.

500 Startups is set to close seven deals, starting with the investment in used-goods marketplace Spoyl in December 2016, according to venture partner Shalini Prakash, who heads India investments and operations for the firm.

The investment in Spoyl came through 500 Distro, a global micro fund under the 500 Startups umbrella, its first in the country. Another global micro fund, 500 Fintech, also made its first investment in India with payments startup Ftcash earlier this month.

“The priority is to invest in more companies in India. Several of our other micro funds, such as 500 Fintech, 500 Distro and 500 Durians, apart from the 500 Startups Fund itself, are looking at India to invest,“ Prakash said.

500 Startups, which has invested in more than 60 Indian startups since it began investing in the country in 2012, saw its highest number of investments in 2015, when it made more than 20 deals in the country. However, the fund took a back seat in India last year, making only a few accelerator deals and the Spoyl deal in December, as it was in the process of launching an India-focused micro fund of $25 million.

Government working on new industrial policy
Source: The Economic Times; June 13, 2017

The government is working on a new industrial policy with a view to promoting and developing frontier technologies, innovation and enhancing competitiveness of domestic products.

"With the changing manufacturing scenario, introduction of new technologies, innovation, R&D, artificial intelligence and automation, there is a need to completely revamp the industrial policy of 1991. We are working on that," a senior official said.

The official said the new policy would focus on several areas like ways to encourage innovation, further simplification of taxation system and address new challenges of the manufacturing sector.

It would also be aligned with the government's flagship programmes such as Make in India, Skill India, Startup India and the foreign direct investment policy.

The Department of Industrial Policy and Promotion (DIPP), under the commerce and industry ministry, is working on this proposal.

"The draft of the new policy should be ready by September this year," the ministry official said.

As per the DIPP website, industrial policy since 1991 has been more for facilitating the industrial development rather than anchoring it through permits and controls.

Industrial licensing was abolished for most of the industries and there are only four industries, including defence and explosives, where licence is currently required. It said that a number of initiatives have been taken for ease of doing business for industrial licensing, increasing initial validity period of those licences and simplification of application forms.

Industrial production improves 3.1% in April 2017
Source: Business Standard; June 13, 2017

Capital goods and consumer durable output continued to drag industrial production growth

India's industrial production (base year 2011-12=100) increased 3.1% in April 2017 over April 2016. Meanwhile, the growth for March 2017 has been revised upwards to 3.8% from 2.7% reported earlier. The manufacturing sector's production rose 2.6% in April 2017. Meanwhile, mining output moved up 4.2% and the electricity generation galloped 5.4% in April 2017.

As per the use-based classification, the primary goods output improved 3.4% in April 2017 over a year ago, but the output of capital goods declined 1.3%. The intermediate goods output moved up 4.6%, while the output of Infrastructure/ construction goods also increased 5.8% and consumer non-durable durables 8.3%. However, the production of consumer durable goods declined 6% in April 2017 over April 2016, while recording fall for fifth straight month.

In terms of industries, fourteen out of the 23 industry groups in the manufacturing sector have shown positive growth in April 2017 as compared to the corresponding month of the previous year.

Industrial production rose 5% in April-March FY2017, compared with 3.4% growth in the corresponding period last year. The manufactured product sector output improved 4.9%, while the mining and electricity generation improved 5.3% and 5.8% in April-March FY2017.

The industry group 'Manufacture of pharmaceuticals, medicinal chemical and botanical products' has shown the highest positive growth of 29.1% followed by 17.9% in 'Manufacture of tobacco products' and 9.5% in 'Manufacture of machinery and equipment'.

Start-ups to face diverse impact in new GST regime: Experts
Source: The New Indian Express; June 14, 2017

The introduction of the Goods and Services Tax comes as a mixed bag for start-ups as there is a varying impact of the new tax regime on each of the startups depending on the sectors they cater to. However, the element of certainty that comes with GST will largely prove to be the biggest advantage for start-ups, removing scope for shadow expenses.

With the implementation of GST, start-up s need not worry about these expenses, burdening themselves with unplanned expenses, pointed out M N Vidyashankar, president, India Electronics Semiconductor Association. The number of ongoing litigations with respect tax conflicts is humongous because it is subjective as of now.

With the implementation of GST, there is no scope for ambiguity and hence these litigations will come down, Vidyashankar said. “There are time limits prescribed for each action including refund. The industry will have a clear idea about the kind of rates to factor in for pricing.”

Start-ups in different service areas would also have to brace up for varying impacts. When it comes to online certification, a sector that is seeing rapid growth in the country, service tax should be exempted, opined Krishna Kumar, founder and CEO, Simplilearn.

“Online courses will be instrumental in catering to huge demand for jobs in newer domains. Service tax should be exempted on skill-based certification courses that has huge potential to enable lakhs of young, white-collared working population to up-skill and help India become a knowledge led economy.”

Can India emerge as a major contender for aerospace manufacturing?
Source: Business Standard; June 14, 2017

With global aerospace worth $ 100 billion, the potential for the Indian aerospace industry is only expanding year on year. The numbers speak for themselves. The ninth largest civil aviation market in the world has witnessed 40 percent growth in passenger traffic in the past two years and the demand for commercial aircraft exists & is ever increasing.

The industry is defined by its enthusiasm and demand for very high levels of technology, dragging project life cycles and high costs. Hence, India was following the ‘perfectionist import substitution’ route, where the country met its demand with partnerships with imported original equipment manufacturers (OEMs) for licensed-production of aircraft.

The Make in India initiative launched by Prime Minister Narendra Modi, in September 2014 as part of a wider set of nation-building initiatives, has paved way for airframe manufacturers to increasingly use aerospace suppliers in the country. This path-breaking movement has given India great advantages on the global aerospace industry scenario. The intention is to accelerate the investments in acquisitions and infrastructure, creating a voice among the worldwide aerospace players. However for now, the momentum seems a little slow but steady.

Why retailers are offering big discounts on electronic goods
Source: Times of India; June 14, 2017

Diwali has arrived early for consumers as retail stores and e-commerce sites are offering big discounts on electronic products such as television-sets, refrigerators, air-conditioners and washing machines among others ahead of the GST (goods and services tax) rollout on July 1. Typically it's the festival season starting around October that showers customers with hefty discounts from various retailers and brands.

But why are offline and online marketplaces like Amazon, Flipkart and Paytm offering discounts upto 40 per cent on various items in June. Read on to find out the reasons.

1. Prices of consumer electronics are likely to go up by 3-5 per cent once GST is implemented as most of them fall under the 28 per cent tax slab, which is the highest bracket and a jump from the current 23 per cent tax rate.

2. Most retailers have announced these discounts in a bid to to clear inventories ahead of the GST rollout.

3. Retailers are likely to make a loss of about 6 per cent on unsold stock purchased before May, and about 14 per cent on inventories that are a year old, against which input credits cannot be availed.

4. Under the GST regime white good manufacturers are allowed to avail some input tax credit on inventories. The taxes paid by a manufacturer, while buying raw materials and/or services, are known as input tax. Most retailers, however, want to start with a clean slate to avoid complications.

Cabinet approves signing of MoU between India and Bangladesh for promoting cooperation in field of Information Technology and Electronics
Source: Business Standard; June 14, 2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi was apprised about an Memorandum of Understanding (MoU) which has already been signed between India and Bangladesh for promoting cooperation in the field of Information Technology and Electronics (IT&E).

The MoU was signed in April, 2017 between Ministry of Electronics and Information Technology, Government of India and Information and Communication Technology Division of Bangladesh. It will remain in force for a period of five years. Thereafter, the MoU will be extended at any time within the period it remains in force by mutual written consent of the Parties. It can be terminated by either Party after giving six months' prior notice in writing to the other Party.

The MoU in the field of IT&E is technical in nature and focused primarily on e-Governance, m-Governance, e-Public Services Delivery, Cyber Security, Capacity Building etc. The MoU aims to explore business opportunities, IT&E market in Bangladesh by Indian IT companies and attract investment in Indian electronics and IT sectors in India which would indirectly generate employment opportunities.

Intel announces Rs 1,100cr investment blueprint for Bengaluru R&D centre
Source:; June 14, 2017

The chipmaker said this facility, when it becomes operational, will be the first one outside the US and consolidate all its engineering operations into specialised R&D activities.

Intel today announced the setting up of its Rs 1,100-crore design and verification centre being built in Bengaluru, the first one outside the US.

Karnataka Chief Minister Siddaramaiah launched the blueprint of the building, which apart from employing more numbers will also help enhance R&D capability and innovation out of India.

On the occasion, Siddaramaiah said Karnataka had always been in the forefront when it comes to the IT industry, and that such investments would bring tremendous job opportunities and strengthen the IT sector here.

The chipmaker also announced that the centre—housed in two buildings, one of which is ready—is being designed and built using green building codes and will follow a new construction technology.

State IT, BT, and Tourism Minister Priyank Kharge said, Intel had recognised India’s potential early and had already invested Rs 28,000 crore in the country.

This R&D centre is expected to further provide jobs, and validates the potential of the state. We are hoping that in the near future, Intel will start manufacturing its chips too here as the government is providing a lot of impetus to start electronics’ manufacturing, including defence electronics as well as establishing centres of excellence.

Tesla in talks with India for temporary relief on importing high-end electric cars
Source: Business Standard; June 15, 2017

Silicon Valley-based Tesla is in talks with the government of India to temporarily waive off restrictions on the import of its high-end electric cars into the country until it builds a local manufacturing unit here.

“In discussions with the government of India requesting temporary relief on import penalties/restrictions until a local factory is built,” Elon Musk, billionaire visionary and CEO of Tesla, said in a Tweet on early Thursday.

India does not restrict the import of new vehicles into the country, but they do attract a custom duty as high as 119 per cent for a CBU (completely built unit). However, Musk is most likely referring to a waiver of the country’s 30 per cent local sourcing norm for setting up single-brand retail here.

Globally, Tesla controls the entire experience for customers, from manufacturing cars to selling them through its own stores, unlike traditional auto companies which engage dealers. Musk’s adamancy on this has meant even today the company does not have stores in a few US states, owing to laws made to protect auto dealers there.

Earlier, Musk had earlier hinted that Tesla’s India entry could be delayed due to the country’s rule that 30 per cent of parts must be sourced locally. “...the supply doesn't yet exist in India to support that,” he had Tweeted.

Make in India: Defence Ministry cleared purchase of equipment worth $38.6 billion since formation of Modi govt
Source: Defence Aviation Post; June 15, 2017

In a boost to PM Modi’s make in India initiative, the Ministry of Defence (MoD) has cleared purchase of equipment worth $38.6 billion developed by state-owned Defence Research and Development Organization (DRDO) since Modi govt took charge, Sputnik News reported.

The report said that DRDO-developed products such as Tejas fighters, airborne early warning and control system (AEW&C), Akash weapon system, Sonar systems and Varunastra torpedo have been inducted into the armed forces over the last three years

It further said that the top decision-making body of the Defence Ministry gave the clearance to the products developed by DRDO which increased the production value of such equipment by 60% in the last three years.

"The production value of DRDO-developed products, cleared by the Defense Acquisition Council, has grown by 60 percent in the last three years to approximately $38.6 billion from nearly $24 billion. The export potential of DRDO-developed systems has also increased manifold and this year export of torpedo stands at $37.9 million," Sputnik News quoted from a statement released by the Defence Ministry.

Promoting innovation: Moving towards a better intellectual property regime
Source: The Financial Express; June 15, 2017

The economic growth of a country is heavily dependent on the culture of innovation and creativity that it has developed. Systematic implementation of innovative ideas results in the availability of better goods and services, which, in turn, benefit consumers. Governments globally devise policy measures to foster a congenial environment for innovation. Laws dealing with Intellectual Property Rights (IPR) and competition play a significant role in maximising these benefits. A patent safeguards the rights dealing with invention. And the law dealing with anti-competitive conduct promotes competition amongst businesses, resulting in new players. A well-designed patent regime has considerable synergies with an effective competition law policy.

Globally, government agencies and regulators have found it difficult to draw the balancing line between the usage of IPRs and competition law violations.

Despite the positive aspects of patents, there have been instances where patent holders have indulged in abusive practices. Most such practices relate to issuance of licences which cause prejudice to an existing trade or industry, licences providing for exclusive grant-back, coercive package licensing, etc. In such situations, competition law has a major role to play as it is premised on preventing artificially-created entry barriers. Interface of IP/patent and competition law can be seen when there is a disparity between the exclusivity rights granted by IP law and anti-competitive practices that the competition law tries to deal with.

Compiled by IESA Research

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