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All you should know about IESA President’s Pre-Budget Recommendations

M.N Vidyashankar

M.N Vidyashankar, President, IESA

All eyes on the coming Budget, the aspiration of the Industry has stuck inside the briefcase of the FM. The potential and engrossment of the ESDM sector has viably paved colossal opportunities for the country.

M.N Vidyashankar, President of the India Electronics & Semiconductor Association (IESA) – a pivotal body representing the Indian Electronic System Design and Manufacturing (ESDM) industry has chalked Pre-Budget Recommendations for 2016.

The key desideratum recommended for the ESDM sector

  • We need to have Re-Exports zones in the country, similar to the SEZs we are promoting. The re-exports zones should have the facility of importing capital equipment, products, devices which will undergo value addition in the Re-Exports zones. Thereafter, it would be exported from the re-export zone with a duty free/tax-free dispensation. It has to be a bonded customs warehouse, identical to the dispensation in SEZ. Re-export zones have a huge potential of creating jobs, rapid prototyping facilities, testing, tooling, etc.
  • Measures should be taken to solve the MoEF hurdles that prevent import of used electronic equipment. This is severely crippling the R&D activities, and is hurting everyone.  This issue has been unresolved for the past 3 years.It’s time something is done about it at the earliest. Lots of investments are getting re-routed to other countries, which we can ill-afford.
  • Another area is Transfer Pricing arbitrariness by assessing officers. Many battles have been fought and court and tribunal orders have gone in favor of the enterprises but the assessing officer’s whims and fancies continue. Neither the government nor the enterprises benefit- Only the Tax consultants gain from this. Reclassification of Agreement with parent body and thereby stating that the value addition is much higher from India and hence higher % of markup is the new fad I have seen. I am not sure if any of you have experienced this recent months. Redefining the transactions with retrospective effect- claiming that what you did in 2010 is different from what you have claimed etc. is another whimsical stand I have seen recently. Bottom line is rather than incentivizing investment it is becoming disincentivising it. I think the industry need to give a clear message to Government.
  • Simplification of the procedures to setup a startup, declaring annual returns during the early stages (until say three years of sustained revenue over Rs. 5crores) and liquidation (should be lot simpler than winding up private limited company).
  • Larger avenues for CSR fund deployment:  Incubation Centres in Universities should qualify for CSR funds amongst others.

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