30 per cent RoI Possible on Manufacturing of Electronics in India
NEW DELHI, December 21, 2012 /PRNewswire/ --
Findings of Report Prepared by Electronics Bazaar Magazine With Support From ELCINA
An electronics manufacturer, who currently gets a return-on-investment (RoI) of 10 per cent, can now manufacture in India with 30 per cent RoI. This is possible according to a report prepared by Electronics Bazaar magazine with support from ELCINA, India's leading electronics industry association. This will also enable an Indian electronics manufacturer to produce at a cost on par with China.
The report states that if we combine the Union government's capital subsidy on investments (offered under Modified Special Incentive Package Scheme) with the cluster subsidy (promised under Electronics Manufacturing Clusters Scheme) and add them to the incentives offered by a state government, it will amount to an RoI of a minimum of 30 per cent. While this estimation will vary with different products and different situations, it is a generalised view and can be a thumb rule for all products, which makes for a conducive manufacturing environment.
While currently, domestic manufacturers get an RoI of 10 per cent, a company manufacturing in China gets an RoI of 21.87 per cent. But after availing incentives under Modified Special Incentive Package Scheme and Electronics Manufacturing Clusters Scheme, a company in India can get an RoI of 20 per cent. When we add the interest rebate offered by state governments like the AP government, the combined effect of these within the SEZ and a cluster will work out to be more than 30 per cent RoI. Under similar conditions, a company in China will get 32.5 per cent.
Different subsidies offered by the government
Subsidy on capital expenditure: Under Modified Special Incentive Package Scheme, companies that invest in special economic zones (SEZs) will get a 20 per cent subsidy on capital expenditure, and those operating out of SEZs will get a 25 per cent subsidy. Non-SEZ electronics units will be reimbursed the countervailing and excise duties paid on capital equipment.
Subsidies for cluster development: Under Electronics Manufacturing Clusters Scheme, the government is offering incentives of Rs 500 million each to 200 clusters set up by manufacturers. For greenfield and brownfield clusters, assistance would be restricted to 50 per cent and 75 per cent, respectively, of the project cost (subject to a ceiling of Rs 500 million), under the electronics manufacturing cluster (EMC) scheme.
State government incentives: State governments are also announcing policies for the electronics industry to boost local manufacturing. Those leading the race are Andhra Pradesh, Madhya Pradesh, Karnataka and Uttar Pradesh. Cluster members will avail additional benefits that the state governments offer through their electronics hardware policies like tax holidays, employment creation-related subsidies, reduced power tariffs, etc.
For more details, refer to http://electronicsb2b.com/home-page-splash/now-you-can-manufacture-in-india-with-30-roi/
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