How about the chances of foreign companies outsourcing their instrument / component requirement from Indian manufacturers or a foreign company setting up a plant of its own in the country, making it an export hub?

Barring some basic components, I do not see any of such possibilities in the near future. The reason being, Indian manufacturing is very much segmented and unorganised. A I told you before, although India has a reservoir of talent, it lacks the drive for innovation and R&D, which is essential in any field of technology.

Although the foreign companies would set up their marketing offices in India, unless the structure of Indian analytical industry evolves from the current way, unless there is speedy clearance in evolving policies and decision making from the government side, I do not see anything positive emerging like a foreign company making India an export hub for its products. May be at the end of a five years horizon, we will see some kind of improvement.

How does the domestic analytical instruments industry view the current duty structure in India?

India is following an inverted duty structure, where high import duty is charged for the components imported compared to the final product. After India becomes TRIPs complaint post 2005, it will become mandatory for the government to allow all instruments coming under chapter 9027 of the harmonised code to be imported duty free. However, it is left to the Indian government to charge duty on the components.

The current level of import duty on the components is 35 per cent. IAIA's advise to the government is to totally exempt components from the duty or at the most bring the current duty to minimum levels of say 0-5 per cent.

If this is not done, chances are there that the existing manufacturers would go for importing the entire equipment paying nil duty as against buying components on a duty of 35 per cent, in addition to other arrears like the octroi and sales tax.

Bringing import duty on components to zero levels would encourage people to import components more and manufacture the final product in the country. This will augment manufacturing, increasing employment for the locals.

What are the other key issues pertaining to the AI industry?

50-60 per cent of the domestic analytical instruments are meant for the government sector comprising of government labs, research institutions and universities. The government has to simplify and make the tender system user friendly. Currently, one has to pay Rs. 2,000 to Rs. 5,000 for a tender form. Besides, an earnest money of 3 per cent is charged on the quoted value. Then, there is the cumbersome procedure of making the payments through a bank, ensuring the payment is reached, waiting for the government response for another 18-24 months. The worst time comes when in the end you come to know that the tender is awarded to some other party and not your company.

As a mean to avoid all these hurdles, the government could issue the tender form on the internet, get the quotes from all the issued parties, collect payments through the net. A lot of time could be saved in this manner.

The government has to take responsibility of building world class, spacious exhibition facilities across major cities of the country, if it has to project India as destination par global class, worth of attracting quality investment from across the world.

(Ref : CHRONICLE PHARMABIZ Dated November 25, 2004)