Is The Union Budget 17-18 Aimed To Promote Local Manufacturing?

The NDA government’s Union Budget 2017-18 on 1st February, 2017 has put forth various initiatives to give a boost to the digital economy and in turn, giving a boost to the ESDM (Electronic Systems Design & Manufacturing) industry as well.

● Allocation of ₹ 7.45 billion for MSIPS (Modified Special Incentive Package Scheme) and EDF (Electronics Development Fund) to make India a ‘global electronics manufacturing hub’.
● Defence budget increased by about 5.8 per cent to ₹ 2.74 trillion with provisions for strategic electronics.
(Source: electronicsb2b.com)

The Budget has aimed to reduce corruption post the demonetization through digital economy. The Indian IT and electronics sector has witnessed a transformation in hardware manufacturing capabilities and subsequent market size, boosted by government initiatives like Make in India.

It is understood that the greater allocation of funds for MSIPS and the EDF will encourage local manufacturing in the Indian electronics hardware industry. However many industry experts feel that far more incentives to manufacturers of IT and electronics products could have been offered. For example, Even though, the mechanical and electro-mechanical parts used in LED lights, are manufactured in high volume in India, as per the new budget, these items will be subject to 5 per cent BCD, as compared to earlier BCD (Basic Custom Duty) at 10%. In such a scenario, industry experts raise doubt whether this move would result in the import of these parts rather than Indian manufacturing.

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