Govt wants Made in India PCs

Want orders? Must invest. It's a tried-and-trusted formula of many policymakers, including those in India, to woo investors. In the Indian defence sector, for example, foreign companies are bound by what are called offset obligations, which require them to procure a part of the equipment from local suppliers. The aim is to boost the domestic arms industry. Now, the government has taken the same approach in electronics goods, quietly tweaking its earlier policies for the segment. 

The welcome mat is a procurement budget for 30 big-ticket government projects -- each worth a billion dollars and at various stages of launch. This is besides routine orders. Taken together, the total orders are estimated to be worth nearly $50 billion a year. Massive? It sure is. Problem is the government will only pick domestically manufactured electronic goods for these projects, according to a recent cabinet decision. The government has in effect asked global hardware makers to set up shop in India quickly. 

At first glance, electronics manufacturing in India has finally got a boost after years of neglect. The lion's share of electronic products that India consumes is imported. The Indian electronics goods industry is at best a ragtag bunch of businesses providing value - that too, a mere 5-10 % - to the imported goods. 

Indians are suckers for these goods thanks to the increase in their disposable income. The total demand for electronic goods is projected to reach $400 billion by 2020. But it is unlikely that India's electronics import bill, which now stands at $45 billion, will keep pace. This difference, it turns out, was both a wake-up call and trigger for the government to come up with a new policy for the electronics goods sector. 

To make the 'Made in India' cut, the value addition has to be 25% in the first year and 30% in the second year. Currently, electronics giants such as Samsung, LG, Dell and HP import 90% ofhardware parts. The value addition in electronics is a mere $2 billion and the government expects a significant jump in future.