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12/30/2024 2:12:46 PM
(MENAFN- KNN India)
New Delhi, Dec 30 (KNN) The Electronics and Computer Software Export Promotion Council (ESC) has approached Finance Minister Nirmala Sitharaman with proposals for enhanced tax incentives in the 2025-26 Budget, aimed at strengthening research and development in India’s domestic hardware sector.
During recent discussions with the Finance Ministry, ESC officials emphasised the need for comprehensive incentives to foster innovation and technological advancement in the electronics hardware industry.
The council’s recommendations come amid concerns over India’s relatively modest R&D expenditure, which currently stands at 0.6-0.7 percent of GDP, significantly lower than competing nations such as China, the United States, and Israel.
This disparity exists despite India’s electronics market being valued at USD 155 billion in 2022, with projections indicating growth to USD 300 billion by 2025-26.
Among the key proposals, ESC has requested an additional 5 percent income tax reduction for corporations that invest more than 3 percent of their turnover in R&D and file patents or designs in India.
The council noted that similar incentive structures are already in place in countries like the United States, South Korea, Vietnam, Malaysia, and China.
ESC Chairman of Global Outreach, Sandeep Narula, emphasised that substantial R&D investment is crucial for Indian companies to compete effectively in the international market.
He highlighted the importance of aligning electronics products with India’s diverse population needs and economic growth objectives.
The council has also proposed modifications to the Design Linked Incentive (DLI) Scheme, suggesting an extension until January 2035 and requesting additional funding of USD 20 billion.
ESC Executive Director Gurmeet Singh noted that numerous small MSMEs are prepared to invest in R&D and innovation, requiring financial support to establish themselves in domestic and global markets.
Furthermore, ESC has recommended a 10-year tax holiday on sales of products developed through in-house R&D efforts that result in intellectual property such as patents and designs.
This measure aims to encourage companies not participating in the DLI scheme to invest in innovative product development and reduce dependence on foreign technologies.
(KNN Bureau)
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