Calcutta, Feb. 11: The government is working on a package of initiatives for the electronic hardware industry to fend off competition from cheap imports.

A taskforce set up by the Prime Minister’s Office, headed by C. Rangarajan, chairman of the economic advisory council to the Prime Minister, is preparing the package.

It will be similar to the incentives for the semiconductor industry that were announced last year. According to A.G. Rohira, president of the Electronic Industries Association of India (Elcina), “The taskforce was formed to sort out differences among the ministries of finance, commerce and information technology. The local industry is suffering as post-WTO (World Trade Organisation), the electronics hardware sector has been opened up to zero import duty. It makes indigenous manufacturing uncompetitive compared with imports from China, Thailand, Malaysia and other countries.” India imports electronic component and equipment worth $15-16 billion annually.

India’s electronic hardware sector is valued at $16 billion, the same as imports, which is 1.75 per cent of the country’s gross domestic product (GDP).

In China, the sector is worth $300 billion, which is 13 per cent of its GDP. Central sales tax is a major roadblock facing Indian manufacturers.

Elcina director B.S. Sethia said, “The 3 per cent sales tax just helps in making local production even less competitive leading to cascading taxation. Measures such as a uniform value added tax of four per cent for all electronic components, assemblies and sub-assemblies will help in encouraging local producers.”

In 2006-07, demand for electronics hardware was at $30 billion against supply of $15 billion. While demand has been growing between 25 per cent and 30 per cent, production has been growing at 15 per cent.

In terms of production capacity, the share of Bengal is less than 2 per cent.

“A state which has such skilled manpower required for this industry is languishing for the lack of right policies and approach,” Sethia said.

Uttar Pradesh leads in production with a 20 per cent share. Noida, which is in the western part of the state, is India’s No. 1 electronics hub.

Maharashtra is second with a 19.6 per cent share.

A ISA-Frost & Sullivan report has forecast that the Indian market for all electronic products and equipment will reach $320 billion by 2015, of which the share of local manufacturers will be $155 billion.

The report says the sector is expected to generate 21 million jobs, directly and indirectly, resulting in revenues worth $56 billion to the government.

At present, the industry employs less than two million and generates revenues of around Rs 15,000 crore.