India’s electronic imports could exceed the overseas purchases of bullion for the first time this year thanks to an increase in the import of smartphones. Estimates based on government data showed that the import of electronics surpassed those of gold and silver in the first six months of the current financial year.
"There is bigger concern as real electronic imports are much more than what is captured. Electronic components of cars such as electronic gears are still not counted, else these would take the import figure to a much higher level," said Ajay Sahai, director general of the Federation of Indian Export Organisations
India is one of the fastest growing consumers of electronics globally. Domestic production of electronic goods was $31 billion during 2014-15. Electronic imports grew from $2.85 billion in May to $4.38 billion in September. This growth was led by a sharp rise in purchases of integrated chips, personal computers, and more. In April-August, mobile phone imports were pegged at $2.4 billion. The import of such large quantities of electronics questions the success of the government's target of ‘net zero imports’. It also highlights the need to direct the focus of the Make in India initiative on the electronics sector.
Director of Ahuja Radios, Suresh Madan said, “The government talks of 'Make in India' but there is no change in labour laws or improvement in transportation and power availability that can encourage small and medium enterprises, which value add to imported goods to the order of 400-500 per cent.” He also cited the removal of a 2 per cent incentive for electronic hardware exports to the EU, the US, and India’s neighbours as the reason why his company’s overseas sales contracted by 35 per cent in the past six month. India sells $1.8 billion worth of components abroad with Europe being the top destination. The industry also criticises the inverted duty structure that hinders domestic manufacturing. For example, the import of microphones has zero duty, but its components attract a duty of 7.5 - 10 per cent.
Source: ET Retail