Discuss the salient features of Phased Manufacturing programme. How its objectives can be linked with Global value chain for sustained economic development? (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 5 years
KEY POINTS
· Phased manufacturing programme (PMP) at present is meant to promote use of locally made components in mobile phones. MeitY (Ministry of Electronics and IT) is exploring to expand it to other segments as well,
· Phased Manufacturing Programme (PMP) valid for 5 years till 2024 to support setting up of a few large-scale, export-competitive integrated batteries and cell-manufacturing Giga plants in India.
· PMP in this year aims to encourage manufacturing of mobile components in the country.
· It also aims to promote the indigenous manufacturing of populated printed circuit boards, camera modules and connectors in 2018-19, and display assembly, touch panels, vibrator motor and ringer in 2019-20.
Linkage with global value chain
· India’s strengths include a vast pool of engineers, competitive labour force, familiarity with English, and others.
· Many MNCs have set up design and R&D centres in the country, connected with manufacturing sectors. With the right policy environment, a thriving electronics sector well-integrated with shifting regional supply chains could help boost exports and create new jobs.
· Strategising imports of electronics in terms of final and intermediate items is important, as imports of certain products remain essential.
· While India increased import duties on certain electronic products in the 2018-19 Budget, it recently exempted 35 machine parts used for manufacturing mobile phone components from basic customs duty to promote local handset production. A balance will need to be maintained on the import duty structures of such products.
· India needs to continue focus on easing the way business is done, especially in terms of trade across borders such as time and cost of border compliance, documentary compliance, etc, both for exports and imports.
· The time taken for border compliance of imports in India is more than five times that in Vietnam and the cost is almost 25% higher, as per the World Bank. Dedicated industrial parks could help develop a supportive trade system.
· GVCs demand high quality and on-time delivery, necessitating behind-the-border logistics support, with high-speed and reliable linking of industrial parks and ports.
· Equally, contract enforcement, recourse available to firms in case of violations, length of settlement periods, legal processes, etc, need to be considered.
· Workshops by MNCs with suppliers including those at lower tiers could assist in building quality and meeting requisite standards. The government could also set up training centres for SMEs in key manufacturing clusters.
· The electronics market in India is projected to grow to $400 billion by 2020 and this, coupled with global demand for electronics, creates huge opportunities for firms to invest in India as a hub for exports.
· The PMP has contributed to lowering imports of handsets while imports of circuits and micro assemblies has concomitantly risen.
· Systematic government and industry interventions could create a fertile ground to enable development of the electronics sector.
