Here’s why Budget 2017 is good for India’s hardware ecosystem

Anand Murali February 1, 2017 3 min

The Union Budget 2017 gives India’s anaemic hardware ecosystem some reason to cheer.

The Make in India movement and Digital India have been two of the main frontiers the government has been trying to champion since they were announced. During last year’s budget, the government had announced initiatives to help boost both the movements.

Finance minister Arun Jaitley said earlier on Wednesday that over 250 investment proposals for electronics manufacturing have been received in the last two years, totalling an investment of Rs 1.26 lakh crores.

“I have, therefore, exponentially increased the allocation for incentive schemes like M-SIPS and EDFs to Rs 745 crores in 2017-18. This is an all-time high,” Jaitley said during his budget speech. This is a good move and will boost electronics manufacturing in India.

Make in India smartphones

Earlier this month, OnePlus India head Vikas Agarwal told FactorDaily that the company plans to produce at least 70-80% of their demand for OnePlus 3T in India. In 2015, Chinese mobile manufacturer Xiaomi had set up an assembly plant in Vishakhapatnam to meet a majority of its India market demand. These companies currently assemble their phones in India. But, eventually, they will have to bring the entire hardware ecosystem to India to service local demand.

Custom duty changes for hardware

Jaitley also said that changes in customs duty have been brought about in order to provide adequate protection to the domestic electronics/hardware industry. He said, “In order to incentivise domestic value addition and to promote Make in India, I propose to make changes in Customs and Central Excise Duties in respect of certain items… Some of these proposals are also for addressing duty inversion.”

Jaitley also said that changes in customs duty have been brought about in order to provide adequate protection to the domestic electronics/hardware industry  

This change also includes a 2% special additional duty (SAD) on populated printed circuit boards (PCB) an important component used in the manufacture of devices like computers and mobile phones. According to the mister, this additional duty should avoid duty inversion and help the domestic industry.

Med-tech gets special attention

The budget announcement also mentioned new rules for regulating medical devices. “These rules will be internationally harmonised and attract investment into this sector. This will reduce the cost of such devices,” Jaitley said.

There has been a lot of innovation in the medical hardware space in India, especially in the low cost diagnostic device space. Devices like Cardiac Design labs MIRCaM, Forus Heath’s 3nethra Neo and TerraBlue XT’s TJay are trying to make medical diagnostics accessible to all.

“Even though the facts are not very clear for the first time, there has been a special mention of medical devices, which is a positive indication. This should help create an ecosystem for indigenous manufacturing of medical devices, which should make them more affordable and more suited to Indian conditions,” Chandrasekhar K, founder and CEO of Forus Health, told FactorDaily.

Digital push for fin-tech hardware

Since the demonetisation drive began, the government has been pushing digital payments in a big way and this was very evident in this year’s budget speech by the finance minister.

One of the key highlights of the speech was Aadhar Pay, a merchant version of the Aadhar Enabled Payment System, which is expected to be launched soon  

One of the key highlights of his speech was Aadhar Pay, a merchant version of the Aadhar Enabled Payment System, which is expected to be launched soon. Jaitley also announced the setting up of a mission with a target of 2,500 crore digital transactions during 2017-18. “Banks have targets to introduce an additional 10 lakh new PoS (point of sales) terminals by March 2017. They will be encouraged to introduce 20 lakh Aadhaar-based PoS terminals by September 2017,” Jaitley added.

Indian POS and other fintech hardware manufactures have been enabling ecommerce and logistics companies to accept digital payments. “These announcements are not out of line with the directions the government has given since November 8. Nothing looks surprising at a macro level, but hopefully each one of them will solve some portion of the digital payment game and, in aggregate, it will be good,” said Abhijit Bose, cofounder and CEO of Ezetap.