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India’s GST Tax System Benefits Electronics Manufacturing

A recent overhaul of India’s commercial tax system is poised to make it an even more attractive source for electronics manufacturing and exports. July 1, 2017 marked the formal launch of India’s new nationwide Goods and Services Tax (GST). A constitutional amendment spearheaded by the government of Prime Minister Narendra Modi, GST represents a uniform, transparent tax code for all Indian businesses, replacing a convoluted regional tax structure, where 29 states independently levied their own complicated schedules of surcharges, excise tariffs, and other taxes. GST mitigates the economic burden of multiple local taxes compounded on a single product. While such sweeping reform may expectedly trigger some issues within India’s diverse domestic economy and massive population, GST is also specifically designed to foster additional international attention to the nation’s expanding export manufacturing sector, in accordance with the government’s ambitious Make in India campaign. [1]

GST Provides Greater Opportunity

How will India’s manufacturers, and their worldwide OEM clients, benefit from this new GST structure? Inbound supply chain materials delivered into India’s Special Economic Zones (SEZs), including Syrma’s 120,000 square foot flagship Chennai facility, are deemed zero-rated goods, and may be exempted from taxes or eligible for credits or refunds. This savings can be passed on directly to clients. GST lowers supplemental costs for warehousing and logistics, currently as much as 8% of a manufacturer’s total expenses. Centralized GST payments to the government are transacted 100% electronically, leaving a verifiable accounting record and discouraging kickbacks and other corruption common among other manufacturing countries.

The reduction of multiple domestic taxes will encourage OEM goods made in India to be directly distributed to technology-savvy Indian consumers. Lower manufacturing taxes will directly translate into more competitive domestic retail pricing. Combined with India’s relative political and economic stability, the added incentives created by GST are expected to spur a dramatic uptick in the nation’s share of the global electronics manufacturing market. According to an independent report highlighted in the Economic Times, those numbers are forecasted to grow from a recorded $31 billion in 2015 to a projected $104 billion by 2020. [2]

Backed by 40 Years of Expertise

We contribute our 40 years of design and manufacturing expertise spanning multiple diverse markets, and we look forward to discussing how we can deliver world-class products for OEMs across the globe. We understand our home India market, familiar with its vast regulatory and selling environments. We foster growth opportunities within India through our strong technology incubation ecosystem. We also assist global OEMs seeking to enter the India market by leveraging the local supply chain and favorable operating environments for cost reductions.

Our flagship Chennai location opened in 2006 and lies within a SEZ for electronics manufacturing, offering economic incentives for imports and exports. This primary facility is within 90 minutes of the Chennai seaport and 20 minutes to the international airport, with additional road and rail, connectivity linking to the rest of India and beyond, as well as infrastructure advantages with faster import and export clearances. We also have labor force availability, both technical and manual, to rapidly scale to client demand.

To learn more about this topic, please contact us.

Syrma TechnologyIndia’s GST Tax System Benefits Electronics Manufacturing

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