Ashwini K Aggarwal, Director, Applied Materials, India has a rich and diverse experience in handling Enterprise and Government segment for the tech intensive ESDM sector. At Applied Materials, Ashwini handles government affairs which covers the public policy, programs and market development initiatives relating to high-tech electronics including semiconductor electronics and solar.
He was recently appointed as Chairman of IESA. Ashwini is an industry veteran with more than 30 years of experience. As Chairman of IESA, he is handling a range of advocacy and ESDM industry development initiatives. He is the co-chair/Executive Committee member for key committees in IESA, ESSC, USIBC, CII, FICCI, ELCINA & IEEMA. Here is the talk with Ashwini asking him about current ESDM industry in India, manufacturing and related issues.
1. Share something about your association with IESA and your key role to play here.
It’s been a pleasure for me to be associated with IESA and cater to the entire ESDM ecosystem. I have been associated in one way or another with IESA for many years and have witnessed the important role IESA plays in rejuvenating the ESDM sector. Our vision of transforming India into a robust, self-sufficient market for ESDM with a future scenario of our country becoming a “design-led electronics manufacturing hub” looks a viable possibility.
Along with my colleagues in the IESA Board of Directors/ Executive Committee, I have a vision of building our nation by building this core industry – by getting investments, building innovation and enabling industry – and by being a Chief Evangelist of its momentum.
IESA has some focused Core Interest Groups doing excellent work in their respective domains. I invite you to engage in CIGS of your interest and I look forward to teaming with you on this journey.
Tell us about ESDM industry overview and your experience in this sector?
India’s ESDM industry is sized at US$82 billion in 2015 growing at a CAGR of 8% from 2013. By 2017 the sector will become a $100+ billion opportunity and is forecasted to grow further at a CAGR of 16- 23% to reach US$171-228 billion by 2020. The “Make in India” project designed to transform India into a global manufacturing hub has given a strong impetus to the entire ESDM sector. The sector is expected to grow steadily in the next five years. This is opening avenues for manufacturers to invest in Indian market, companies are looking at growing their manufacturing base here in order to serve domestic markets as well as export regions.
My experience has been very pleasant working for this sector for around 30 years in companies like HP and AMAT. There’s more to do for this sector and I am very positive about taking our ESDM ecosystem to the next level.
What key challenges you would like to highlight for this industry?
The major challenge has been the lack of component ecosystem in the country and that’s been one of our major focus areas to develop the complete ecosystem in the country. With the various policies and other efforts, India will overcome the challenges soon. As mentioned, rather than debating on the challenges we need to look forward on how to overcome them.
What do you think about new GST implementation and how it affects electronics manufacturing in India?
GST will have a positive impact on the Electronics industry and is a much more preferred regime than its preceding one. The few salient points in favour of GST are mentioned below:
- Earlier there were two to three levels of indirect taxation, which were subjective. As a result, they could be interpreted differently by the taxman. The GST Council has classified IT services in the 18 per cent tax slab. Earlier, IT services were taxed at 13-15 per cent, but there were a lot of indirect taxes and areas that were open to interpretation.
- After the implementation of GST, everything has moved online and there is no manual interference which has also helped in transparency.
- Smartphones currently attract 2% central excise duty, while VAT rates varied from state to state and was in the 5-15% range. Weighted average VAT rate on smartphones works out to about 12%. Thus, the present total tax incidence on smart phones works out to more than 13.5%. As against this, the proposed GST rate for smart phones is 12%.
- Medical devices will also witness a lower tax burden with the GST rate pegged at 12% instead of the current incidence of over 13%, which includes 6% central excise duty and 5% VAT.
- Electronic products like laptops and desktops, tablets, LED Lights, accessories, etc. will also get cheaper.
- All these reduction in prices will boost the electronics demand in India. With so many mobile phone companies opening manufacturing facilities in India in last 2 years, this will be a highly motivating cause to expand their operations in the country.
What is the influx of foreign companies setting up manufacturing units in India and its implications?
Foreign Direct Investment (FDI) inflows in India’s manufacturing sector grew by 82 per cent year-on-year to US$ 16.13 billion during April-November 2016. Apple plans to produce iPhone SE at an upcoming facility in Bengaluru, owned by its partner Wistron, which has upgraded the plant to assemble Apple iPhones. Panasonic Corporation, the Japan-based electronics company, plans to set up a new plant at Jhajjar, Haryana, to manufacture refrigerators for the Indian market, and a Research and Development (R&D) centre for appliances consisting of two technical divisions to strengthen its product development in the country.
BSH Home Appliances Group, the leading home appliances manufacturer in Europe, inaugurated its first technology centre in India at Adugodi, Bengaluru, which will enable the company to further develop localised technologies for the Indian market. China based LCD and touchscreen panel manufacturer, Holitech Technology, has announced plans to investing up to US$ 1 billion in India by the end of 2017. Chinese firms like Huawei, Lenovo Motorola, Xiaomi and Gionee and home-grown brands such as Intex, Lava, Karbonn and Micromax have been assembling products in the country. Indian companies can also export mobiles to the neighbouring and East Asian countries. These plants manufacture 20 million phones every month. There are ample number of investments coming into India, apart from the above mentioned, and due to the success of these companies, India is gradually progressing towards becoming an export hub as well.
According to you what is the Impact of current policies w.r.t. manufacturing and Make in India?
With the implementation of the various policies like Make in India, MSIPS, EMC and EDF, etc., the domestic manufacturing of electronics is on the rise led by mobile phones. The value of mobile phones assembled in India has increased 373% in the last two years, from Rs 19,000 crore in 2014-15 to more than Rs. 90,000 crore in 2016-17. About 40 mobile phone making plants have started since Modi announced Make in India in September 2014.
The evolution of India’s electronic landscape is subtle but significant. There are visible green shoots in many areas. We have Adani Group’s Solar Fab becoming operational in this quarter, and we see the number of hardware start – ups grow exponentially to cross 600 mark in 201There is a display fab project in the wings…the SCL Chandigarh fab is operational and making 20+ chips end-to-end.The base reference point has clearly shifted for Indian electronics.