Biplab Pal, 10th July, 2013
biplab@zreyastechnology.com/biplabpal2000@gmail.com
Although India is shining in IT sectors thanks to outsourcing, the country is continually losing its capability in electronics and mechanical R&D/manufacturing. We run a small Electronics R&D company in USA and in India. My experience has confirmed getting electronics and mechanical talents/vendor/components in India is an increasingly difficult task. Reason is simple. This industry didn't grow at all and worse, it has lost capabilities thanks to Chinese dumping of electronics good in Indian market. Today situation is so critical, India needs to import even the most simplest micro-motors and other communication chips. Nearly 100% of its electronics components are imported. Even the basics of electronics industry, PCB fabrication is facing a looming threat before cheap Chinese competition.
Under this dire situation of electronics industry in home, Indian Govt. issued a preferential market access (PMA) policy. Under this policy, any foreign company who is selling electronics goods in Indian Govt, Telecom sector etc had to produce at least 30% of their goods in India. This policy did no discrimination against foreign companies. The policy wanted the foreign companies to set up manufacturing unit in India. This had tremendous potential for all round growth in electronics industry in India as the vendor line would have swelled. Moreover, it would have created jobs for skilled and unskilled Indians interested to pursue a career in Electronics.
Besides homegrown Telecom equipment companies like Tejas would have benefited. Today, China is boosting two giant telecom vendors who have outplayed their western rivals CISCO and Alcatel/Lucent-Huawei and ZTE have grown to be the largest Telecom equipment company in the world. If you look at the history of both the companies, they have grown very fast on Chinese Govt order flow. On the other hand, Tejas in India could not grow and they are still struggling due to lack of order from Indian Govt. This was in sharp contract with Chinese Govt policy towards ZTE and Huawei which helped them to propel as $30B company within last two decades. Therefore PMA would have reversed all the mistakes done by the Indian Govt. in the past for not boosting local electronics industries. Example of ZTE vs Tejas shows PMA is absolutely needed for India to boost its electronics manufacturing base.
Many small companies like us who have operational electronics unit in India saw the benefit as well. Under the new policy, all foreign companies who wanted to sell products in India had to partner with local Indian companies to produce them in India. This would have led to job and industrial growth. Before this policy, all these foreign companies needed to do for bagging a contract in Indian public sector- hire an expensive dalal in Delhi who is a nephew of Minister X and they are done with their duties towards India to bag multi-billion dollar deal from Indian defense.
We already started seeing its benefit. Since the PMA was declared on February 2013, we have already seen around $100M new FDI in this sector in India. Expert estimated this policy would have created 2M direct and indirect job in next 10 years.
But on 8th July, PMO decided to drop present PMA under tremendous pressure from foreign companies and other countries pursuing their interest in India. I am totally shocked by the perverted logic for dropping "Buy India" policy! Lobby groups are terming it as unrealistic target as India is not prepared for such a scale of manufacturing! Well then they have established the logic of why this PMA was needed in India badly in first place.
It is clear the present Govt. acted under the pressure and money from Delhi dalals hired by foreign companies who do not want to set up manufacturing in India due to archaic Indian company laws. President of US-India business council, Ron Somers indicated India does not need a PMA policy as these companies will set up manufacturing base in India automatically provided they get right kind of infrastructure. If that is the case they should try to reform the Indian bureaucracy which is deterrent to manufacturing initiative. We would have welcomed those steps. But Indian Govt should not succumb to the pressure from them at the expense of the interest of its own people.
This action of dropping "Buy India" policy amounts to treason against Indian people by its own Government. For once, I certainly want Indian opposition parties to expose the present Govt. as stooge of foreign interest in Delhi. They need to hold UPA responsible for loss of 20 lakhs job to pave the way for dalal-raj in Delhi.
biplab@zreyastechnology.com/biplabpal2000@gmail.com
Although India is shining in IT sectors thanks to outsourcing, the country is continually losing its capability in electronics and mechanical R&D/manufacturing. We run a small Electronics R&D company in USA and in India. My experience has confirmed getting electronics and mechanical talents/vendor/components in India is an increasingly difficult task. Reason is simple. This industry didn't grow at all and worse, it has lost capabilities thanks to Chinese dumping of electronics good in Indian market. Today situation is so critical, India needs to import even the most simplest micro-motors and other communication chips. Nearly 100% of its electronics components are imported. Even the basics of electronics industry, PCB fabrication is facing a looming threat before cheap Chinese competition.
Under this dire situation of electronics industry in home, Indian Govt. issued a preferential market access (PMA) policy. Under this policy, any foreign company who is selling electronics goods in Indian Govt, Telecom sector etc had to produce at least 30% of their goods in India. This policy did no discrimination against foreign companies. The policy wanted the foreign companies to set up manufacturing unit in India. This had tremendous potential for all round growth in electronics industry in India as the vendor line would have swelled. Moreover, it would have created jobs for skilled and unskilled Indians interested to pursue a career in Electronics.
Besides homegrown Telecom equipment companies like Tejas would have benefited. Today, China is boosting two giant telecom vendors who have outplayed their western rivals CISCO and Alcatel/Lucent-Huawei and ZTE have grown to be the largest Telecom equipment company in the world. If you look at the history of both the companies, they have grown very fast on Chinese Govt order flow. On the other hand, Tejas in India could not grow and they are still struggling due to lack of order from Indian Govt. This was in sharp contract with Chinese Govt policy towards ZTE and Huawei which helped them to propel as $30B company within last two decades. Therefore PMA would have reversed all the mistakes done by the Indian Govt. in the past for not boosting local electronics industries. Example of ZTE vs Tejas shows PMA is absolutely needed for India to boost its electronics manufacturing base.
Many small companies like us who have operational electronics unit in India saw the benefit as well. Under the new policy, all foreign companies who wanted to sell products in India had to partner with local Indian companies to produce them in India. This would have led to job and industrial growth. Before this policy, all these foreign companies needed to do for bagging a contract in Indian public sector- hire an expensive dalal in Delhi who is a nephew of Minister X and they are done with their duties towards India to bag multi-billion dollar deal from Indian defense.
We already started seeing its benefit. Since the PMA was declared on February 2013, we have already seen around $100M new FDI in this sector in India. Expert estimated this policy would have created 2M direct and indirect job in next 10 years.
But on 8th July, PMO decided to drop present PMA under tremendous pressure from foreign companies and other countries pursuing their interest in India. I am totally shocked by the perverted logic for dropping "Buy India" policy! Lobby groups are terming it as unrealistic target as India is not prepared for such a scale of manufacturing! Well then they have established the logic of why this PMA was needed in India badly in first place.
It is clear the present Govt. acted under the pressure and money from Delhi dalals hired by foreign companies who do not want to set up manufacturing in India due to archaic Indian company laws. President of US-India business council, Ron Somers indicated India does not need a PMA policy as these companies will set up manufacturing base in India automatically provided they get right kind of infrastructure. If that is the case they should try to reform the Indian bureaucracy which is deterrent to manufacturing initiative. We would have welcomed those steps. But Indian Govt should not succumb to the pressure from them at the expense of the interest of its own people.
This action of dropping "Buy India" policy amounts to treason against Indian people by its own Government. For once, I certainly want Indian opposition parties to expose the present Govt. as stooge of foreign interest in Delhi. They need to hold UPA responsible for loss of 20 lakhs job to pave the way for dalal-raj in Delhi.
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