ISA welcomes government’s efforts to boost innovation and domestic manufacturing

BANGALORE, INDIA: The India Semiconductor Association (ISA) has commended the Indian government’s commitment to stimulate manufacturing and innovation in the country.

Salient features of the budget:

Manufacturing (electronics and semiconductors)
* FM’s decision to fully exempt raw materials used in manufacturing specified electronic components from basic customs duty is a good move and will result in higher value addition.
* The GoI’s plan to come out with National Manufacturing Policy and increase share of manufacturing in GDP from the present level of 16 percent to 25 percent over a period of 10 years is noteworthy.
* Reduction in basic customs for few more materials used in the manufacturing solar cells/modules to nil will correct the distortions in the duty structure and further strengthen solar PV manufacturing in India.
* Reduction in excise duty on LEDs to 5 percent and full exemption on special CVD will bring down the cost of manufacturing of LEDs and lead to faster adoption of LEDs in India
* Extension of concession available to parts, components and accessories for manufacture of mobile handsets till 31st March, 2012 and to include few more items in its ambit will further bring down manufacturing costs in India.

R&D
* The government’s decision to encourage innovation through National Innovation Council is a welcome step. Constitution of State and sector specific innovation councils are expected to lead to more IPs coming out of India
* Enhancing weighted deduction on payments made to National Laboratories, Universities and Institutes of Technology to 200 per cent will give a fillip to R&D activities

Skill development
* Connectivity to all 1,500 institutions of Higher Learning and Research through optical fiber backbone by March, 2012 will enhance quality and delivery of education and research.
* Allocation of Rs. 500 crore to National Skill Development Council’s will enable supply of skilled workforce

Others
* IT initiatives in governance and other projects would create opportunities for IT hardware and software industry.
* Creation of a cell on Transfer Pricing is a welcome step
* The government has provided an impetus to the renewable energy and clean energy industry. Launching of National Mission for hybrid and electric vehicle will lead to growth of the automotive electronics segment

Poornima Shenoy, ISA president, said: "ISA welcomes the Budget 2011 proposals which will stimulate manufacturing and innovation in India. The government’s plans to come out with a National Manufacturing Policy and promote domestic value addition by rationalization and reduction of duty structures is very commendable. The increase in weighted deduction of payments to National Laboratories, Universities and Institutes of Technology to 200 percent will give fillip to R&D activities.

"We can also expect creation of higher no of IPs through the Governments’ initiatives in setting up State and sector specific Innovation Councils. In addition, the efforts to strengthen the budgetary allocation to NSDC will produce skilled workforce which can be readily deployed in the industry."