NITI Aayog proposes tax holidays, FTAs to boost electronics manufacturing

NITI Aayog has prepared a draft strategy paper for promotion of electronics manufacturing in India, which suggests tax holidays and the creation of a duty-free market for electronic goods through free trade agreements (FTAs).

The draft strategy paper titled 'Make in India - Strategy for Electronic Products' suggests a 10-year tax holiday for companies investing over $1 billion in electronics manufacturing activities.

Besides, NITI Aayog has suggested a host of incentives to attract investment to boost manufacturing of electronic products.

NITI Aayog has almost finalised a policy draft and is expected to seek cabinet's approval for a long-term policy to exploit the huge potential for electronics manufacturing.

With imports accounting for 58 per cent of India's total 2014-15 domestic consumption of electronics hardware of $63.6 billion, the country needs a wholesale shift in policy to become a net exporter of electronics goods, says the policy draft.

Also, as India's domestic market for electronics goods looks relatively small at around $65 billion, NITI Aayog has also been asked to devise an export-oriented strategy for the industry in order to tap the global market, which is in excess of $2 trillion.

The Aayog's view is that for a bigger play in the global market India's needs to open up investment channels and market through a reorientation of policy to ensure the industry becomes competitive in export markets.

''We would also want to provide for the 10-year tax holiday on investments of $1 billion or more that can also create 20,000 jobs. This would help bring some large foreign firms to India,'' Aayog has stated in the paper.

Besides, the agency suggested the need to forge free trade agreements (FTAs) to create duty-free market for electronic goods.

It had also suggested setting up coastal economic zones (CEZ) which may be up to 200-250 kilometres wide from the coastline.

NITI Aayog had placed the policy draft in the public domain for comments in May this year and had sought views and comments from stakeholders and the general public.