[inwester]

Originally Posted by Turbanator

https://www.ndtv.com/india-news/expl...dtv_topstories

If you read the article there's this section -

However, it quoted a government official as saying that there are a variety of reasons for imposing these restrictions but the primary is "to ensure that the security of our citizens is fully safeguarded".

Not sure what to make of it and whether to laugh or cry at this.

I'm not commenting on the policy merits and demerits, but the language is so vague and poorly written.

Also a genuine question, why not the same policy on the cellphone market, which is at least 15x in terms of size (monetary value)?

[nakul0888]

I just have one question for those who support these protectionist policies. Why shouldn't we implement these protectionist policies among the different states of our own country as well if they are all so good? Imagine Kerala putting Tariffs and licensing on goods coming across from Tamil Nadu and Karnataka. Karnataka doing the same to Maharashtra. Each and every state trying to promote industries and employment within their own borders. I mean the logic is solid.
You can say we are all Indians and all but culturally, socially, physically there is enough difference between Indian states that they might as well be like the different countries altogether.

How about we take this concept even more forward? How about Trade wars among different cities? Mumbai, Pune, Bangalore, Chennai all putting tariffs and licensing against each other trying to build up production and employment within the city limits. Why shouldn't we give it a try?

[pandey.jai]

I understand that the intention here is to increase manufacturing in India. My question (and I apologize if it comes across as rather naive) is will this result in an increase in assembly or actual manufacturing?

My assumption here is that things like laptops may end up being assembled here, so the underlying components will still likely be imported. This isn’t going to reduce dependency on other countries (like China for instance).

[jomson13]

Originally Posted by inwester

If you read the article there's this section -

However, it quoted a government official as saying that there are a variety of reasons for imposing these restrictions but the primary is "to ensure that the security of our citizens is fully safeguarded".

Not sure what to make of it and whether to laugh or cry at this.

I'm not commenting on the policy merits and demerits, but the language is so vague and poorly written.

Also a genuine question, why not the same policy on the cellphone market, which is at least 15x in terms of size (monetary value)?

The quoted government official must be from Mumbai / Pune. They gave the same reason while declaring car pooling illegal!
Very good material for stand up comics I'd say!

Regarding the import ban - One change that I foresee is this - instead of asking someone returning from abroad to get you liquor from the duty free shop, they now will be asked to get computers!

Quite crazy times we are living in..

[deep_bang]

Originally Posted by GoBabyGo

Hi, I will be happy if India go instead of "Made in India" to "Made by India".

I believe they are 2 different things. If you see the world over and the assembly units they are usually where low cost labor is. For example Mexico is one of the places where a lot of assembly happens and is close to the Americas markets. However as a component level manufacturerz Mexico is still nowhere.

So my thought process is that, these are 3 levels each of which has its own advantages and needs.

Component level designs:
These are core IP that's very deep into its own domain. Like display technologies, or storage etc.
For example, laser printing technologies were very early patented by the Japanese like Canon/Xerox etc and they continue to hold the most IP in this segment. DRam is made by Samsung, SK hynix, micron mostly. Similar distribution with SSDs. Phone Cameras are probably made by a handful of companies like Sony, Hasselbad etc.

Product level designs:
These are designs created to put together to use the above components and make a product. This capability needs lesser domain knowledge but more of an integration mindset to marry multiple components and make a product and sell it. Includes sales/marketing/legal aspects etc.
Example: Ather is a great example of this.

Assembly level:
This is more of a labor intensive market which is analogous to a factory. Examples of these are the contract manufacturers like Foxconn.

Each of the above categories have their own value.

India is already doing a lot of product level work. The unicorns that we have are all examples of the same. Where we lack I believe is the first category - which also is the hardest as it begins in the universities and ends in the companies using these. I think we need to look at this in the context of how to connect universities to industry.

[SmartCat]

Originally Posted by nakul0888

Why shouldn't we implement these protectionist policies among the different states of our own country as well if they are all so good? Why shouldn't we give it a try?

Does the word "Octroi" ring a bell?

Originally Posted by pandey.jai

My assumption here is that things like laptops may end up being assembled here, so the underlying components will still likely be imported. This isn’t going to reduce dependency on other countries (like China for instance).

When it comes to cars, a country that wants to build manufacturing capability starts with -

- SKD assembly (semi knocked down kits)
- CKD assembly (completely knocked down kits)

After that, you progress into:

- Replacing imported stand-alone components like batteries, tyres/wheels, seats, windscreen etc with locally sourced products
- Replacing imported engineering components like suspension, braking etc with locally sourced products

And then finally get into building engines, first by assembling and then later sourcing engine components.

But you still import high tech component like hybrid systems or V6 engines or DSG gearboxes. That is fine. Nobody expects to make 100% of a consumer product in one country.

Ditto with smartphones/TVs/laptops -> you start with simple assembly line and then slowly start increasing the locally sourced components over time.

Samsung invests $500M to set up a smartphone display plant in India
Japan's Fuji Electric to expand India ops, invest $50mn, export made-in-India hardware
Exide to invest Rs 6,000 crore in setting up lithium-ion unit in Karnataka
Micron’s $2.7 billion investment in India may localise electronics manufacturing components

[autobahnjpr]

Originally Posted by Hayek

Licensing is far worse than import duties. If you want to encourage local manufacture, a 10% customs duty should be more than enough. After all, Foxconn’s Operating Profit margin globally is 2.5% - so a 10% tariff gives you 4 times the margin just from the tariff that the world’s biggest electronics manufacturer makes.

The logic of this argument assumes that price is fixed and the import duty will eat into the profit. It is not like that. The import duty will be added to the profit margin and increase the product price. The price of a car in Europe and India will differ and it will be higher here due to the import duty. Manufacturer does not reduce the margin because there is import duty.

Some of the comments like telling the emperor has no clothes or that no one knows about economy are quite generic and reek of bias. We are the 5th largest economy GDP wise and are slated to have a 6.5-7 trillion USD economy in next 6-7 years. Surely, one import restriction does not define the whole economy and it D-O-E-S not indicate the level of incompetence that is hinted at. We have sprung back from the covid induced slowdown very rapidly and are the only bright spot economically in the entire world.

Which law of economics says allowing import of laptop will improve the Indian economy and benefit people? And we become protectionist if we do otherwise.

We are not the sole repository of knowledge on all matters under the sun. Economic theories and principles are contextual and two economist do not agree on a specific principle. Therefore being judgmental on areas which are probably outside our area of expertise or are not completely clear to us due to data not known to us, is not a good policy in general.

[Sebring]

Having checked out 'Made In India' TVs recently, I found the TVs to be fatter, bezels thicker, the AC wire to be thinner including the plug, panels weren't as bright, remote wasnt solar etc. So I brought in a TV from overseas. Believe me it's just not the same. And the cost is double.

[tsk1979]

Originally Posted by autobahnjpr

Therefore being judgmental on areas which are probably outside our area of expertise or are not completely clear to us due to data not known to us, is not a good policy in general.

Its not judgement. Its literacy. Things like 2+2=4 and not 5.

Using those basic skills we can look at simple data like GDP per capita PPP or non PPP etc., from the late ninetees to 2022, and compare it with our peer countries.

Based on performance we infer stuff Eg when to people go to the same class and one scores a B+ but another scores a C-, its just observation in saying that B+ is doing a better job academically.

And then when both students take different decisions regarding the future, its not hard to make an informed judgement.

So saying no data means either one does not want to look at data which does not fit their faith, or they are ignorant of the data, which is also not a good thing. When it comes to economic policy, both "faith" and "ignorance" are dangerous and should be avoided. What should be looked at is available data, which in the age of internet, does not involve going to the library.

And speaking of manufacturing, there are lots of heavy sticks. But the carrots are very slim. Without a really fat nice carrot dipped in lard, you aren't going to get any manufacturing here, esp since nothing is being banned. Its just being put on restricted list. So whether you get it or not will matter on what your connections are.

[lsjey]

I believe Indian governments to date have all done a sterling job of extracting maximum benefits from FDI and Global MNCs. Firstly, let me draw your attention to the mind-map that I created from a chapter of the book Edible Economics by Ha-Joon Chang. I strongly recommend this book be read to enhance knowledge on economics, capitalism etc.



While new industries can be created in our country, like semiconductor, robotics etc, by allowing FDI we should be careful in how the MNCs work in our country. Afterall all corporates are for profit and not for improving our country’s lot. So it is upon the government to bring in policies that enable technology to be absorbed by local businesses.

There was another thread that was faulting a minister for chiding car manufacturers for importing steel when steel is easily available locally. Allowing such imports will pave the way for us to become an enclave economy like Philippines.

While restrictions on imports will cause pain short term, it will benefit our country long term with more jobs, greater GDP, lesser imports, more exports etc. And all this while seeding newer industries in our country.

Finally, not allowing Chinese FDI is because of their propensity to turn countries into banana republics. The host country does not gain anything, but debt and junk products.

Regards,
Lsjey

[nakul0888]

Originally Posted by SmartCat

Does the word "Octroi" ring a bell?

Time to bring it back then as part of Make in "insert whatever state/city" you want to promote manufacturing and jobs.

[speed79]

Originally Posted by Samurai

If one thought import/export is easy now, think again. Even export is rife with too much paperwork, even if there is nothing physical to ship. India is a software export powerhouse, so it all should be smooth, right? It ain't.

For exporting software or software services, following is the process:

1) Register with Software Technology Parks of India. It doesn't matter if you are working in a STP or outside of it, or in your home. This is one time, but to be renewed every 3 years. You also need Import Export Certificate (IEC), LUT (sales tax waiver) beforehand, each needs to be renewed every year.
[Steps for every invoice transaction]
2) Ensure you have a contract or purchase order with a foreign customer or entity.
3) Invoice the customer for the product or service, mentioning the IEC and LUT.
4) Record the contract/PO at the STPI portal.
5) Collect the FIRC (Foreign Inward Remittance Certificate) from the bank once you received the payment from abroad. Ensure that the sender specifies the remittance purpose code as P0807 - Offsite software export. That should reflect in the FIRC. This also results in an entry in RBI's EDPMS database. It is the exporter duty to clear this entry from the EDPMS database. If this code is missed, it is a big circus to fix it.
6) Apply for SoftEX (software export) approval by submitting the invoice against the PO at the STPI portal. You also need to submit the broadband invoice of the location where you did the export from. You need to mention all the details of the software you exported, along with price and currency. Fortunately, it is all online now thanks to digital certificates. It was lot harder earlier with hard copies.
7) Once the STPI certifies the SoftEX application, submit it along with the FIRC and invoice and STPI registration certificate to the RBI through your forex authorised dealer (your bank). Once approved, it will clear your payment from the EDPMS database. Congrats, you finally completed one export transaction.

Then there is monthly performance report (MPR) you need to submit to STPI. Not to forget APR, the annual performance report endorsed by your CA.

After seeing all this, I have never dared to do import despite having IEC. I ain't that brave.

Being an entrepreneur and running my own software products and services company since 2005, I beg to differ. What you have listed is applicable only for the companies which are registered under STPI to avail the benefits of deferred income tax or freedom from Sales tax or something similar. The Japanese Semiconductor company that I had worked before starting my own company was an STPI registered one, and it was a pain to even take a company laptop out to home as it needed paperwork, so when we started our company we decided not to have it STPI registered. Also, I think STPI registration restricts any sales in India.

We export our software product and sometime software engineering services and it is such a simple task. We deliver our software (product or services) via email or through FTP/shared drives. There is no need of any Softex form. We get payment credited via bank wire transfer to our bank account and get an FIRC automatically from our bank via email for each payment received. Imports as well had been easy as we needed to import several of embedded devices for our software development. Now we even sell our apps on Amazon AppStore and Google Play store, get payment from Amazon/Google credited to our bank account and get the FIRCs. We pay our GST monthly, file company's income tax return and MCA return annually. That's all needed for compliance for a software company without an STPI registration, and it has been long 18 years doing this.

Originally Posted by nakul0888

I just have one question for those who support these protectionist policies.

This is not protectionist policy. This is a way to force OEMs to start manufacturing in India. One of my ex-colleagues (from the same Japanese company) had started a electronics device product, with the aim of giving back India-made products to the society. He started searching for the basic components, but did not find even the basic electronics components (resistors, diodes etc.) locally as even these basic components are not manufactured in India, and are imported from China. So he designed his device, got the basic components from China and got the product made on contract on an assembly line based in Bangalore. Whey we need to source even basic components from China is that China makes these on a scale, and flood all markets worldwide killing local industry. As more and more products are going to be assembled/made in India, a time would come that someone might start manufacturing the basic components as scale will be larger, and it might reduce our dependency on China. it is always better to be an independent country with own economic and manufacturing prowess, rather than being a client state of China.

[Kln]

Protectionism helps noone, and harms the consumer. I'm surprised that the "Digital India" government is forcing subpar products down everyone's throats, and helping crony capitalism.

Actually wait, no, I'm not surprised at all.

Yet another regressive move along the lines of banning Chinese apps like aliexpress which actually helped small businesses here.

[fiat_tarun]

I think it's a good move to move Laptop assemby / manufacturing into the country. Our market is now big enough and attractive enough for local manufacturing to be feasable.

I see many posts on child parts anyway have to be, only assembly locally, etc., but this is how it starts and the GOI know this as well which is why investments will be incentivised.

Our cars have 100's of independant ECU's and a lot of which are locally produced in India. All the semi conductors are imported at zero duty and the assembly takes place locally which is not a small job by any imagination.

Similarly phones, TV's are all following the same system and now we have semi conductor players start to come in to build the component ecosystem as well as nicely put out in a post by Smartcat earlier.

The number of jobs and the extended economy created is immense and much more powerful that GOI collecting higher import duties and that money being squandered off in various ways that we know are possible in our bureaucracy!

[dsuman]

On the face of it this decision looks Bad and I am sure there will be temporary impact to the Economy but in the long run this will benefit India. Remember China also took a hard decision some 30 odd so years ago and look where they are today. They are the Big Daddy of Manufacturing and the World has to rely on China to fulfill its needs.

Strictly my opinion:
I believe the world now wants an alternate Hub for Manufacturing and wants to move away from China. Also I think the world is concerned about the China ways of Working (Data sharing/breaches/spying allegations) through various means. Otherwise till 10 years ago China was hardly perceived as threatening and world was never concerned that they were the only Manufacturing Hub.

Our Honorable PM has been to various countries recently and I feel there is a joint effort from a consortium of Countries to create an alternate Manufacturing Hub.

Example:
1. Apple refusing to setup factory in India in 2022. After our PM's visit in 2023 Apple wants to setup a factory in India.
2. Post 2020, World restricting usage of Chinese Products citing Security Concerns. India restricting Chinese Investments citing Security concerns.
3. Recently, Developed countries - Singapore, UK and USA utilizing ISRO to launch their satellites. Source: https://en.wikipedia.org/wiki/List_o...nched_by_India.

India with its Population, availability of skilled manpower and resources will play an important role in shaping up the World future and its own destiny in the next 30 years to come.

I am all for Make in India.

Excuse me guys if my comments do not go down well with anyone. I do not have any Political affiliations. I just want my kids to see a Shining India.