‘Make in India’ still needs government’s nod on duty

Although Make in India was announced months back but the conducive environment from duty point of view is still a question. Alok Ohrie, president and managing director, Dell India on his expectation from the upcoming budget talks about Make in India and how India can become an export hub.

One of the key focus areas for Dell is to be a strong player in working with the government in its various initiatives to empower the nation. Dell is very excited about the government’s ‘Make in India’ vision aimed at building the country’s manufacturing capabilities, fostering innovation and creating the best-in-class infrastructure for manufacturing products. Dell has a keen interest in partnering with the government in creating a conducive manufacturing environment in the nation, given our experience of manufacturing here and elsewhere. There are two factors that could potentially boost the manufacturing ecosystem, if taken into consideration in the upcoming budget.

The first is with regard to the inverted duty structure. While most key global leaders in the personal computers space have set-up manufacturing operations in India, most of the domestic demand is still being catered to by imports. The customs and central excise tariff structure has historically been such that, the finished goods import for resale/direct import are more often than not better placed than import of components for manufacture and supply. For import substitution to occur, it is imperative for the tariff structure be restructured to provide the much needed edge to a domestic manufacturer. The impact of the inverted duty structure is such that it effectively makes direct import by end customers or trading (i.e., import and sale) of IT hardware/ ITA goods far more advantageous in comparison to manufacturing of these products in India, thus making Indian manufactured goods non-competitive for the domestic market. Streamlining the tax rate for components across the board and extending the benefits that mobile manufacturing gets today, will normalize the situation.

The second is an exports-led approach. Dell believes that there is great potential to develop India as an exports hub for the region. An exports push could potentially attract investment in the component manufacturing ecosystem, due to the surge in demand. In terms of incentives and support from the government, we would like to place our views which would benefit the overall industry, and this is currently an ongoing discussion. The extension of the Focus Product Scheme in the upcoming Foreign Trade Policy will provide the necessary impetus for exports.”