India – An Ideal Destination

India – Manufacturer’s dream destination (be a party to scripting the success story of Make in India)

Over the past two decades, India’s GDP was predominantly been powered by dynamic growth in the services sector. In coming decades the manufacturing sector is seen to drive this growth cycle. At just over 16% of GDP, contribution of the manufacturing sector in India is seen to be below its potential. The Government of India with its “Make in India” program, envisages a huge scope for the manufacturing sector, to grow from 16% to 25% of the GDP.

India’s robust domestic growth story is blessed with following sound fundamentals:

  • positive demographic dividends for the next 2-3 decades
  • ability to do low volume manufacturing at competitive prices
  • safeguards intellectual property rights
  • sustained availability of quality workforce at a relatively low cost as compared to other countries
  • responsible business houses operating with credibility and professionalism
  • strong consumerism in the domestic market
  • strong technical and engineering capabilities backed by top-notch scientific and technical institutes
  • well-regulated and stable financial markets open to foreign investors

The ‘Make in India’ program is designed to:

  • facilitate investment
  • foster innovation
  • enhance skill development
  • protect intellectual property, and
  • build best-in-class manufacturing infrastructure

This year India has contributed more than 12% to world GDP growth (Source: IMF WEO), becoming the world’s 4th largest economy behind only the U.S., Eurozone and China when measured in PPP dollars.

India’ demographic profile with over 60% of population in the working age group of 15-59 years makes it a country with the largest youth population in the world. Currently, there are nearly 4,000 engineering colleges in India that produce more than 1.76 million engineers a year. Additionally, with a present capacity of skill development program at around 3.1 million people per year, India’s burgeoning skilled population provides ample opportunity for the manufacturing companies in aerospace & defence and electronics domain to establish in India.

Demand for innovation clusters in Aerospace & Defense and Electronics

Electronics

The demand for electronic products in the Indian market is expected to reach USD 400 Billion by 2020. At the current rate of growth, the domestic manufactures can only cater to a demand of mere USD 100 Billion as against a demand of USD 400 Billion. As a result this sector is expected to grow at a CAGR of almost 28% year-on-year.

Aerospace & Defence (A&D)

In terms of military expenditure, India ranks among the top 8 countries in the world. The Indian aerospace and defence (A&D) market is among the most attractive globally and the government is keen on promoting investments in this domain. To keep the Indian Defence in a state of readiness and equipped with the latest technology, Ministry of Defence (MoD) through its Defence Procurement Procedure (DPP) has a two-tiered approach: (a) to continue to look forward to the new technologies in the world and, with the help of Indian scientists & engineers, imbibe them into the system, and (b) to maintain, replace and meet regular requirements of the varied defence equipment in demand through indigenisation.

India’s cumulative defence budget (capital plus revenue expenditure) has grown to USD40.4 billion during FY12-13. However, around 75% of defence procurements are made by way of imports. The government proposes to source 75% of its defence requirements from indigenous suppliers in coming decades. This domain with 100% Foreign Direct Investment (FDI) provides promising avenues for the public, private ancillary defence industry by means of –

  • size of India’s defence market,
  • government’s defence budget,
  • 30% offset clause,
  • Defense Procurement Policy (DPP) adopting indigenisation & self-reliance

Andra Pradesh Growth Story

Andhra Pradesh (AP) – secure your passport to the 1st innovation cluster in the newly born state of India

Hon’ble Chief Minister of Andhra Pradesh, Shri Chandrababu Naidu, strongly believes that “Innovation is the lifeblood of entrepreneurship, which coupled together with education will create job opportunities in the state of AP.”

The newly formed state's vision is to

  • develop AP as an innovation society of global repute
  • incorporate business & technology usage in improving the welfare of the state through excellent e-Governance and IT
  • focus on enhancing the quality of life of its citizens, through high-quality education and healthcare, increased productivity in agriculture and allied activities

Ease of Operation

AP Government has specially framed policies that will provide companies ease of setting up their business. Under this initiative, GoAP provides an e-platform, facilitating all necessary clearances to establish and operate an industry within 21 working days. This platform integrates requisite pre-establishment and pre-operation stage clearances. With this policy government enables:

  • Spot Approvals for identified approvals and clearances
  • Deemed approvals based on self-certification
  • Parallel Processing of clearances
  • State Investment Promotion Board (SIPB) and Empowered Committee
  • On-line application filing
  • Single point data entry by applicants/ nodal agency
  • Custom generation of forms for individual Competent Authorities along with requisite attachments
  • Online approval by concerned competent Authorities
  • Online tracking / automatic alerts to applicants through SMS/ Emails
  • Customized MIS reports for monitoring at different levels

The state of Andhra Pradesh provides ample ground and opportunities under it's dynamic leadership. It is pick of the choice for it's

  • complementing characteristic of its vision with India’s ‘Make in India’ program
  • pro-active and responsive administrative set up
  • investor friendly, simple and transparent e-Governance for investment
  • a diversified industrial set up
  • favourable Human Development Index (HDI)
  • excellent telecommunication network
  • Leading engineering education base
  • adjudged as ‘Most reforming province in India’ (World Bank Report 2007)
  • creation of maximum employment in India over last two consecutive years.

State's salient features

  • AP is strategically located on the map of India and has easy access to all parts of the country and is a gateway to Asia-Pacific region
  • The state ranks high in terms of the number – SEZs, country’s total mineral revenue, power utility, paper, cement and bulk drugs production and value addition to various food products & beverages in India
  • The State boasts of a thriving IT/ITES Industry along with commitment to creating an IT Infrastructure, HRD & Investment climate
  • The State has a vast road network and is blessed with the country’s second longest coastline. It has several ports across the coastline, prominent among them being Vishakapatnam Port known for its capability to handle one of the country’s largest cargo of 60 million tonnes per annum.
  • AP is home to many large public & private sector enterprises

Incentivies and Policies

Manufacturing sector in India is grossly inadequate in comparison to the demand for it. The major disabilities that bogs down this segment are

  • High cost of power and finance
  • High transactional costs
  • Poor base of supply-chain.

To overcome this impediment and reckoning the fact of increasing gap between the demand and supply, of nearly USD 300 Billion by 2020, for electronic products manufactured in India, the Government of India and State Governments are giving huge impetus on Make in India. Following are some of the highlights of the policies initiated by the government to establish manufacturing zones.

Modified Special Incentive Packages Scheme (M-SIPS)

This policy was revised on 3rd August, 2015, for a period of 5 years, by Department of Electronics and Information Technology, Ministry of Communications and Information Technology. The scheme is available for projects establishing under Electronics Manufacturing Clusters. The scheme provides subsidy for investments in capital expenditure – 20% for investments in SEZs and 25% in non-SEZs. It also provides for reimbursement of Excise / CVD for capital equipment for the non-SEZ units. For high technology and high capital investment units, like fabs, reimbursement of central taxes and duties is also provided.

Electronics Hardware Policy

This policy was notified on 9th September, 2014, by Government of Andhra Pradesh to enable companies to set up, sustain, function and grow operations in an investment-friendly, proactive, conducive and hassle free environment in the State. Under this policy Andhra Government has tried to fill the infrastructural gap by providing uninterrupted power, water and good connectivity. The other incentives provided under this policy are — subsidy on power, investment subsidy, grants on new employments & recruitment assistance, subsidy on implementation of green initiatives, tax incentives, etc.

Aerospace & Defence Manufacturing Policy

This policy was notified on 23rd July, 2015, by the Government of Andhra Pradesh. The Policy encompasses a holistic package of incentives which includes capital subsidy, fiscal incentives, transportation subsidy and aiding marketing, patenting, quality certification and Research & Development. The GoAP further provides special incentives on case-to-case basis for projects with more than 500 crore investment.

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