INVESTMENT WORTH 5000 CRORE IN ELECTRONICS

Investments worth rs 5000 crore in electronics manufacturing space stuck in bureaucratic red tape

Thursday, July 04, 2013: Red tape may possibly be the worst possible kind of plague to have afflicted Indian policy making. The latest instance to demonstrate this is the fact that proposals worth Rs 5000 crore for investment in the semiconductor and electronic manufacturing space have been stuck in the bureaucratic red tape for over a year.

According to a report in Business Standard, the problems arise out of the fact that there is no clarity on who will approve of the investment proposals that are lying with the government. The electronic manufacturing industry, incidentally, had been declared a priority sector for investment in the modified special incentive package created earlier this year.

Investments in the space assume even greater significance given the fact that besides oil, semiconductor and electronics form the second highest items on India’s import list and affect the country’s fiscal deficit in a big way. Also the fact remains that in a country that boasts of a colourful technology space, most of the action has been restricted to the services players, who work on the cost arbitrage model.

According to sources in the government, thus far, 15 proposals worth Rs 5000 crore have come the government’s way under the M-SIPS. Chief among them are proposals from the world’s largest maker of telecom equipment Tejas Networks, which is based in Bangalore in India, and has a plan of investing up to Rs 1,769 crore towards building expanding its capabilities in the area of new generation technologies such as 3G and 4G LTE (long-term evolution).

Analysts and industry insiders say that if the government continues to be unable to fast track these investments, chances are that these companies will end up withdrawing their proposals.

“In order to process expressions of interest from these companies at an appropriate speed, a committee consisting of representatives of key ministries such as electronics, finance and environment should be set up. Hi-tech and electronics manufacturing should be provided single window clearance if the government wants to speedily convert its vision into reality,” says Jaideep Mehta head, IDC India.