Infrastructure Needs

1
India shinning
12 Million mobiles added pm 50 tele density.
Salaries 8 k, NREGA 40k, Bharat Nirman 500 k
Telecom Boom 25 Bn or 1 lac Cr (0nly 40 of
electronics mkt)
2
At 1.15 Tr we are the third largest consumer on
PPP basis.

?
Fastest growing Telecom second largest
3
Advantage India

• India ranks better than China and Vietnam on the
  Index of Economic Freedom although it is lower
  than the world average as awarded by The Heritage
  Foundation and WALL STREET JOURNAL.
• India scores higher than China and Vietnam on
  World Rankings property rights, which describes
  the protection of property and intellectual
  property rights
• India has a score of 38 on economic measure of
  income inequality better than China (47) US (45)
  Japan(38) but poorer to UK (34). Shows equal
  distribution of wealth.
• The annual supply of science and engineering
  graduates is higher than China and other
  developed countries
• Over 2.3 million graduates and 0.7 million
  post-graduates each year
• 2nd largest pool of scientists/ engineers in the
  world
• Highest number of qualified engineers, second on
  trained doctors
• 389 universities, 14,169 colleges, 1,500 research
  institutions

4
Is the Growth Inclusive for Indian Mfr / IPRs
5
Story is not Inclusive Neither Long term

• Third largest Consumer consumes only .7 of the
  semi conductors
• 25 of Indias trade deficit is bcoz of
  elctronics.
• Not one Electronic hardware Co in the top 50
  Scrips

6
Electronic Production Vs National GDP
India has a long way to go
7
Not for the faint heart
Yr 2008 World Electronics 1500 Billion Dollars
Indias share of imports 3 (50 K Cr) world
Indias share of exports 0.1. (1.6 K Cr)
Ratios are adverse in automatic data processing
units
Telecom Demand expected Rs 1 Lac Crore or 25 Bn
Manufacture maximum Rs 27000 Cr with 11
value add Royalty Payments Rs 1650 Cr
Software Export is 14000 Cr Prod 40000 Cr
8
Chakravuyuh
140000 Cr Software export is important but is it
long term view ? It enriches the IPR / Brand
Owners
Can India survive as Job worker or as sub
contractor ? Or as an assembly line ? Will we
ever have the Indian Brands ?
9
Information Highway

• Extremely dynamic , Vibrant fast changing.
• Mirages
• Oases
• Road kills

Brand owners IPR holders will survive the test
of time.
10
Sectoral approach !

• Transnational Companies Appreciate the
  contribution. they bring in technology, best
  practices, global experiences, much needed
  finances employment. Slow absorption of these
  elements will lay a foundation.
• Domestic Manufacturers . Require support for
  stumbling practice on the domestic turf.
  Provide market pull to create a level playing
  field lightweight Indian hardware designer needs
  to compete with Multinational technological
  heavyweights with abundant firepower.
• Indian IPR creation Support the talent pools
  dedicated to RD so that some day we can boast of
  Indian brand names in Telecom hardware. IPR owner
  is at the top of the value chain ultimate
  riches flow there hence Indian IPR development
  efforts deserve special incentives in long term
  national interest.

11
Invite FDI / Multinationals The dream pipes
today

• Non availability of working capital at
  international cost
• Encourage Mobile handset manufacturing
• Robotics futuristic technologies
• Non availability of basic infrastructure to
  support large scale manufacturing
• Eco system Infrastructure for roads ports.
• Uniformity of Government policies compliances

12
Domestic manufacturers Prepare the Ground

• Availability of working capital at international
  cost
• Permit use of ECBs for working capital and for
  long term customer credit. .Most operators import
  their infrastructure due to attractive financing
  terms offered by global vendors particularly
  the Chinese
• Interest subsidy scheme for Small Medium
  Enterprises dealing in ITA 1 items..
• Deemed export status
• The goods provided to the domestic Operators by
  the manufacturers to be deemed as Exports.
• Encourage domestic manufacturing create a market
  pull
• Incentivse TELCOs to buy from domestic
  manufacturers . Higher the local value add higher
  the incentive to TELCO. This market pull will
  create an automated incentive for TELCOs to help
  domestic manufacturers improve quality of local
  manufacture IPR,
• There should be preference to local manufacturing
  in every large tender.
• For telecom applications of national security,
  preference should be given to Indian products to
  ensure long-term support and national security of
  strategic assets.
• Revenue neutral reimbursements or concessions
• Indian manufacturer pays taxes on end customer
  pricing.
• Cascading effect of local state levies.
  Contributes by greater corporate Income tax tax
  paid by staff.
• It could be 15 to 20 if the Value add is over
  40.

13
Indian IPR Prepare Pray

• Israel Experiment cover up to 50 of the RD
  expenses, of Indian private sector companies that
  develop technology for defense national
  security. This will create RD-driven companies
  export Cos.
• Create dedicated fund for RD Initial corpus for
  RD and product development out of USO fund. The
  initial corpus of Rs 100 crores can be created
  further enhanced by allocating 10 of USO funds
  generated every year. These grants could be given
  as a conditional loan (at 0 interest) to cover
  RD expenses,
• No MAT for telecom RD companies for 5 years MAT
  should be waived off for the next 5 years for
  Indian RD/product development companies, as an
  incentive to invest more and become world-class.
• Enhance Tax credit on telecom RD Currently
  125 expenditure on RD is allowed to be deducted
  from taxable income. It is recommended it is made
  three times.
• Reimbursement of excise duty For products
  developed through recognized RD in India, the
  company may be reimbursed the excise duty paid
  for sales of that product in India. This will
  enable them to be more competitive against global
  companies, who have already have a large volume
  base, before entering India.

14
Boost Exports Gaytri dhyaan

• Focus on Electronics exports and promotion of a
  key agenda for foreign trade missions Telecom now
  robotics soon will be the areas of growth for
  Indian companies.
• Credit line of US 1 Billion specifically
  dedicated for electronics exports by Indian
  companies for providing long-term finance to
  their customers.
• Telecom Electronics should be part of
  bi-lateral trade programs Telecom exports from
  India should be included for all aid-in-grant
  programs. This will allow the world to experience
  Indian telecom hardware help build a
  credibility of India as a destination for
  hardware.
• Compensating exports for high transaction costs
  appreciating Rupee. DEBP rates must be enhanced
  to make Indian hardware competitive. DEPB must
  also include reimbursement of local taxes,
  octroi, etc. as is allowed under WTO.

15
Lessons from China Experiment

• China mandated technology transfer as a pre
  requisite to market access.
• 100 export obligations for labor intensive
  manufacturing in China.
• Specifications technology requirements for
  China market so as to ensure technology
  absorption.
• FDI norms local participation followed
  meticulously.

16
Win Win Stategy

• 5 Mn jobs that can triple by 2015.
• 10 Bn exports by 2015. Balance of payment
  improve.
• Self reliance on technology for tactical defense
  projects of national security.
• Enhance national Image with Indian brand names in
  high technology areas.
• Prepare ground for robotics the next sunrise
  industry.

17
Create Value

• Tweak the specifications in India Indian
  manufacturers will have an advantage

18
Final punch

• Is there a reason for me to manufacture in India,
  Today ??

Thank you