When Finance Minister Arun Jaitely presents annual Union Budget in the Parliament, on Monday, the industry would be looking for incentives for domestic manufacturing. The NDA Government has been talking about ‘Make in India’ for last one and a half years. It is also one of the nine pillars of the Digital India program. Under it, the Government envisages zero import of electronic goods by 2020. No wonder, the industry has high expectations.

Even though Digital India was announced about one and a half years ago, nothing concrete is visible on the ground. There is no sign of any make in India. It is not going to happen in near future. Only some handset manufacturers claim to be doing ‘Make in India’, but their claims are true only if you consider China as part of India.

If the Government is really serious about Make in India, there is a need to look at the deep rooted malice. One of the main reasons why companies do not want to manufacture in India is unpredictability in the tax and excise regime.

Whenever a company starts manufacturing in India, a number of factors including State entities and extraneous forces come into play. All of them look for their pound of flesh. No one thinks about the negative impact it would have on the economy. No one is worried about loss of jobs.

No company will do business anywhere in the world unless it knows how much it has to pay for doing good business. The Government will have to ensure a stable tax regime, clear regulations and of course, tax incentives for encouraging indigenous manufacturing.

The telecom industry has proposed a 10-year tax holiday in a block of 15 years to attract investments in the manufacturing sector in India. The ministry has also recommended excise duty exemption on a number of electronic components that would boost manufacturing in India. If accepted, this will certainly give a push to the industry.

Another important ingredient of ‘Make in India’ is R&D. The Prime Minister Narendra Modi has also emphasised on ‘Design in India’. It is important to consider the level of investments in R&D by successful companies. Chinese giant Huawei has an annual R&D budget of about $7 billion. This comes out to be more than Rs47,000 crore per annum. In India, the total R&D budget of the whole telecom industry is close to one per cent of this amount.

This explains why we are not able to produce even a single quality product. Without R&D, we will end up doing low end work in manufacturing. There has to be strong academic and industry interaction and investment in R&D should be incentivised.

(The writer is a Senior Journalist)