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The government plans to announce a number of incentives in the Union Budget on July 10 to boost domestic manufacturing of telecom equipment, including tax incentives to promote hardware consumption and a Rs. 200-crore corpus to aid the sector, a move that is also expected to spin jobs.
The Rs. 200-crore fund will foster indigenous research & development (R&D), Intellectual Property Rights (IPR) creation and entrepreneurship development. Besides, a scheme is also likely to be announced to develop a complete value chain for domestic production of telecom gear to meet the demands of companies operating in India.
“The budget is expected to give some guidance (on domestic manufacturing),” a finance ministry source said.
Concessional tax benefits are also likely for domestic manufacturing of specific electronic, IT and telecom equipment that have security implications. But they are likely to be spelt out differently for both Indian-owned companies with or without foreign partnership and those that have foreign direct investment.
“Specific mention on domestic manufacturing in electronic, IT and telecom in the budget should be expected, unless some more work is to be done on certain aspects,” a finance ministry source said.
Communications and IT minister Ravi Shankar Prasad apprised finance minister Arun Jaitley about the issue of domestic manufacturing at a recent meeting, a source said.
According to IT ministry estimates, the demand for hardware and electronics is expected to touch $400 billion in India by 2020. Based on the current amount of domestic production, $320 billion worth of IT hardware and electronics is expected to be imported to cater to this demand.