Government’s initiative of a Digital India has certainly brought in excitement for the semiconductor space in India bringing forth opportunities and investments to embrace Internet of Things (IoT). 2014 was a very positive year setting the tone of reform, with business sentiments running high post new government formation. In 2015, the consumption of electronics is expected to rise from $6.03 billion in 2011 to $9.7 billion as per Indian Semiconductor Association (ISA). However, domestic manufacturing is predicted to show a downward trend by as much as 6.7%, with the gap being offset by electronics imports resulting in capital outflow. To achieve the exponential growth forecasted, the need of the hour is tangible and specific initiatives to implement the terms outlined in the National Policy on Electronics. In addition, tax exemptions, sops for manufacturing, and R&D grants to arrest the outflow of capital will encourage electronic system design and manufacturing (ESDM) in India.
The manufacturing sector will play an imperative role in 2015, in the Electronics Manufacturing Cluster (EMC) scheme, there are 11 such clusters planned and are presently in different stages of progress. We expect manufacturing to take off in a big way through the MSIPs and EMC schemes. Another key move to improve manufacturing would be to restrict the rate of minimum alternate tax to 10% to provide a fillip to manufacturing. Few of the other important areas where we see changes could be made are reduction in corporate tax rate, aggressive disinvestment of government stake in public sector units, higher personal income tax exemption limits and a massive increase in public expenditure to boost growth.
Internet of Things will be a key driver not only across various verticals like auto, healthcare, telecom etc. but also will help the manufacturing sector. So it will be interesting to see what policies and initiatives the government launches for corporates to adopt IoT. Various studies indicate that by 2020, there will be 50-billion devices connected to internet, creating a $19-trillion industry.