GST is A Game Changer and Will Bring Level Playing Field for Domestic Manufacturers – Dr. Ajay Kumar

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Along with being the Additional Secretary in the Ministry of Electronics & Information Technology, Government of India, Dr Ajay Kumar is also the Chief Vigilance Officer for the Ministry. He is responsible for coordinating with Digital India programme that include coordinating with concerned Ministries/State Governments/agencies in public and private sector for development of policies/frameworks and implementation of projects for three key pillars of Digital India: namely, Digital infrastructure, provision of Digital Services; and Digital empowerment of society. He is also coordinating the promotion of Electronic Design and Manufacturing Industry in the country. Has also initiated several programmes to develop and promote innovation in Electronics and ICT sector.  Dr. Kumar is looking after Cyber Security related matters including India CERT and is responsible for administration of IT Act and Rules in the country. In a tête-à-tête with Devendra Kumar, Editor, ELE Times, Dr. Kumar shared his insights on the Government’s role in the Electronic Industry in India. Excerpts from the interview.

ELE Times: Having worked with both the UPA and the NDA governments, how do you analyse the electronic industry moving forward?

Dr. Ajay Kumar: There has been a tremendous momentum and growth as far as investment in the electronics manufacturing is concerned. We have seen that over 75 mobile and component manufacturing plants have started investment and several of them have already started manufacturing.

Today we have over 250 proposals with investment outlays of nearly 1.3 lakh crores in this sector. Today, both global and Indian companies see India as a major destination for investment and we see this graph moving up.

ELE Times: How are you planning to address the supply and demand issues in the manufacturing ecosystem?

Dr. Ajay Kumar: I think we need to continuously grow the ecosystem for the supply chain. Thanks to Information Technology Agreement (ITA), the market for electronics industry is one and is zero duty across the world. So to be able to create an impact on the global stage it is important to reach global scales of operation. We are doing that in some verticals, I think slowly and steadily we need to do that with other verticals as well.

ELE Times: Our scale of operation is low, so we lose the competitiveness. What is the solution for it?

Dr. Ajay Kumar: You suddenly can’t create scale and scale is a phenomenon which happens in an incremental basis. We have seen that happen in some sectors like mobile and LED. For the interim period, the government has given several incentives to support the investment that is coming.

ELE Times: Kindly throw light on the segments where this investment is coming?

Dr. Ajay Kumar: Investments is coming in some segments like mobile manufacturing, consumer electronics and consumer appliances, LED, solar, etc. We also see some investments in components, strategic sector, automotive electronics sector, where significant investment has come. And then there are theses isolated cases of investment in other sectors as well. But the said sectors are where we see maximum numbers of unit coming up.

ELE Times: There is an apprehension with the MNCs who want to invest in India but have their reservations on infrastructure and the ease of doing business?

Dr. Ajay Kumar: Today, Industrial Corridors through Delhi and Mumbai and other cities have started to develop. We have also come up with the scheme of Electronic Manufacturing Clusters which will create islands of infrastructure of world-class scale for the companies. Nearly 26-27 clusters in 19 states have been approved and are in different stages of development. There has also been a healthy competition amongst the states in how to attract investments in their respective jurisdictions. With the cluster approach, common state government policies and central government policies to create ease of doing business, there has been a significant improvement. Today ‘Invest India’ provides hand holding facility to any potential investors, so that his pain for investing in India is significantly reduced, so that he doesn’t have to run door to door.

ELE Times: Talking about India becoming a manufacturing hub, how do we address problems related to imports and exports, about having no containers, congestion in the ports, and lengthy documentation process?

Dr. Ajay Kumar: Talking about the electronic industry, in the last budget, the custom rules were modified to provide for self-certification, and because electronic industry is zero duty, they are allowed the import at zero duty as well, unlike the others. Self-certification has been introduced, rather than going through the compulsory paper work. One of the biggest problems with manufacturers in India is, you manufacture in one state, and then you do transfer to another state, pay CST, and maintain several books of accounts. GST today has brought level playing field for domestic manufacturer and will significantly help and save cost for him with respect to doing business in India.

ELE Times: Talking of challenges, human resource in India is again a challenge. We have to have 8.5 million skilled people by 2022. How you are going to meet that requirement?

Dr. Ajay Kumar: We are working with the Ministry of Skill Development and Entrepreneurship in this regard. There are three sectors skill councils formed by the industry to meet the skill requirements: the electronics, the telecom and the IT sector skill council and we work very closely with all these sector skill councils, where a total 1 lakh people are being trained, so that those skills set required by the industry are actually able being trained and certified by the industry. That is one type of industry endorsement to what is done.

Additionally, our ministry has started a programme called ‘Visvesvaraya PhD Scheme for Electronics & IT’  with nearly 90 top institutes, the IITs, IICs, NITs, in the country where we fund ministry scholars in the field of electronics and IT. This is over and above what is funded by UGC, Ministry of HR, DRDO, and other sources. Our idea is to create 2500 additional PhDs above what is normally produced.

We also have two major programmes in niche level, one that we call a special man-power development programme where people are being trained on chip design industry, because chip designing is a very crucial to the electronics industry. The second one is a national programme that we run on the cyber security sector which is again integral for lots of devices. So there is a whole spectrum of training and skill development programme to meet the requirements.

ELE Times: Despites our best efforts and 100% FDI in the fabless manufacturing in India, there is hardly any company and it is uncertain that when the projects will be realized. Please enlighten.

Dr. Ajay Kumar: Semiconductor wafer-fab is a highly capital intensive, state-of-the-art-project whose cost would be about 60-70 thousand crores. The whole industry has got consolidated into four or five major players globally to supply the chip requirement. Chip being a miniature item, can be produced anywhere in the world and supplied to any other locations at a negligible transportation costs. So they find it much easier and feasible to expand in their existing eco-system, rather than setting up new ones. However for a country as big as India, especially keeping the strategic implications of fab technology, I think, it is important that we should have a fab industry and therefore we are working in the direction.

 ELE Times: What about the fables manufacturing in India, as here are the multinational companies, but there are no Indian companies?

Dr. Ajay Kumar:  There are few remarkably good chip designers in India, but no one with risk taking capacity. We have created a Venture Capital mechanism to fund the Indian fabless companies and under the Electronic Development Fund (EDF), managed by Canbank Venture Capital Fund, we have given approval to 21 funds with a total venture capital of 10 thousand crores.

We have also set up an incubator with IIT Hyderabad for fabless chip designing industry which has centralized resource of the tools which startup companies can use and try out their ideas on designing chips, bringing down the cost of development significantly.

ELE Times: We have been talking about the zero import in India, but in this year January, we had calculated more import percentage than export, so where do you think we are heading to?

Dr. Ajay Kumar:  First of all, it is net zero import, what the target is. You will be happy to know that in mobile our net imports have started to decline. The domestic production has increased, as our demand has gone up significantly and you are all aware of how smart phone demand is increasing.

 ELE Times: So all these years, how challenging it has been for you?

Dr. Ajay Kumar: Very interesting and exciting, and the fact that we see the industry and investment happening, it has kept encouraging for more work. There has been challenges, the fact that there is results being showing on the ground, has been able to adequately compensate any challenge that may have come.

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