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Budget 2012: Indian electronics industry's wishlist

Posted: 16 Mar 2012     Print Version  Bookmark and Share

Keywords:Union Budget 2012-13  India semiconductor industry  National Policy on Electronics 

Considering the multiplier effect of the ESDM/EMS Industry, the Government should provide a tax holiday to newly set-up manufacturing units in this industry. Government should also provide fiscal support for semiconductor policy announced at the State level, which would encourage states to come out with their respective semiconductor policies to encourage the growth of ESDM sector. Currently, only Karnataka has a semiconductor policy.

Sanjay Virnave, CEO, Mistral Solutions Pvt Ltd: Anti-outsourcing bill in the U.S. and the Euro zone crisis had an impact on the Indian IT sector, which is set to cross Rs.4.95 lakh crore ($100 billion) this year in India. This sector is under pressure from competition created by other developing countries, increase in manpower cost, real estate cost, attrition, utilisation and bench issues.

Sanjay Virnave

Virnave: Budget should focus on providing the relevant and necessary grants and tax rebates..."

With this background, we expect some relief in Tax structure: Extension of Income Tax exemption for STPI unit; Removal of MAT on SEZ; Service Tax payable on export services received into India should be allowed to be adjusted against service tax input credit available; and Too much time being taken for refund of Service Tax.

With respect to the embedded and semiconductor industry, the Government has taken the right step by drafting the National Electronic Policy to promote electronics system design and manufacturing in India. For this to become successful, the Union Budget should focus on providing the relevant and necessary grants and tax rebates that will encourage participation and help create a complete and sustainable ecosystem.

Gopi Bulusu, CEO, Sankhya Technologies: The software products and the electronic design industry looks forward to this budget with the following expectations:

Gopi Bulusu

Bulusu: Reduce corporate tax rate for SMBs engaged in IP-centric businesses."

1. Reduce corporate tax rate for small and medium businesses engaged in IP-centric businesses.

2. Corporate income tax rebate for large companies that invest (equity) in small and medium businesses engaged in product design and development.

3. Tax rebate on the purchase of electronic system level design platforms and tools—which constitute a significant capital expenditure for electronic design projects.

All of these measures will help kick-start the eco-system for software products and the electronic design and manufacturing industry in India.

Guruswamy Ganesh, vice president and country manager, Freescale Semiconductor India: The semiconductor industry in India is poised to grow and there is an urgent need for the Government to continuously reinforce the semiconductor policy, keeping the long term view in mind that will help build the ecosystem for ESDM.

It is also imperative to build a domestic electronics industry for security, self-reliance and future business potential. Any dip in the domestic industry in this sector will result in high rate of import of products and equipment, worth several billion dollars. There is a need to take action to stimulate the Domestic Electronics Industry and support growth opportunities that exist. The recommended National Draft Policy has been the first step to create a globally competitive Electronics System Design and Manufacturing (ESDM) industry and it promises more jobs. I hope that the policy will address the key issues and will be helpful in creating a healthy semiconductor industry ecosystem.

The Government should also focus on encouraging Fab-less Semiconductor Companies, who are doing high-end research and development work in India, to help them continue to grow and develop their base here, since this is the core skill for enabling intellectual property which is the key building block for the semiconductor industry. It is also important to set up a seed fund to encourage entrepreneurs in the Fab-less semiconductor space and actively invest in start-ups. There is lot of opportunity waiting to be tapped for semiconductors in the Government projects such as low end laptops, e-passport and smartcards etc.

On electronics/semiconductor education, S. Sadagopan, director, IIIT-Bangalore: Semiconductor industry is the core industry for many other key industries including automotive, telecom, automation, healthcare and electronics. Investment in semiconductor education is of strategic importance to industry. Naturally one expects the budget to support significant direct investments by way of lab grants, graduate level (M.S., Ph.D) scholarships and tax incentives to corporations who invest in R&D directly or through university R&D.

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