What ails Telangana's EME sector? Officials have no answer

HYDERABAD: Telangana saw a robust growth in IT and ITeS sectors in 2016-17, but the Electrical Machinery & Equipment (EME) sector suffered a major setback during the same period. The sector saw a whopping 40.1 per cent plunge in exports in 2016-17.

Merchandise exports — a broad category that includes pharma, organic chemicals, aircraft and spacecraft parts — and the EME sector together contributed 13.8 per cent to the State’s growth. In that, pharma sector was primarily responsible, contributing 38.2 per cent.

According to Telangana Socio-Economic outlook for 2018, EME sector recorded `877 crore in 2016-2017 as revenue from exports. The same figure in the previous year stood at a whopping `1,465 crore.

“There are three electronic sectors — defence, medical and consumer — and we need to find out where the reduction was felt,” said Jayesh Ranjan, Principal Secretary (Industries), adding that the data needed to be verified. “Most of the companies are in touch with us and no one has complained of any complication in operations or competition from the Chinese market, added Ranjan calling the revelation a “surprise”.

However, industry insiders point out that there is no level playing field amongst the entrepreneurs. “It is not a level playing field for the entrepreneurs in this sector due to the high percentage of imports, not just of electrical components but also electronic plug-and-play units,” said B Venkat Rao, Administrator, Telangana Electronic Manufacturing Industries Association.

“While the government wants to have products made under its Make in India initiative, it still does not charge any import duties or dumping taxes. Does it then not nullify its flagship programme,” argued Rao.

Industry insiders also observe that the government should start to look beyond the few key players and focus on the MSME for sustained growth. “It is not the CEOs or CMDs that matter the most, the focus should be more on the MSME companies. Industry can be strengthened on a whole if more emphasis is put on those players,” said Jesse Inaparthi, Head, TS and AP,  Indian Electrical and Electronics Manufacturers Association.

It may be mentioned here that noted economist and Nobel laureate Paul Krugman recently pointed out the need to increase jobs in the manufacturing sector in the country as it is essential to sustain “projected growth in demography.”

Small EME units fast becoming NPA

Even as reduced export growth rate in EME sector is yet to be pinpointed, the Micro, Small and Medium Enterprises in this sector are fast becoming Non Performing Assets due to delay in realisation of funds provided under various schemes, say entrepreneurs. In the EME sector, there are about 300 units operating in TS and a majority of them fall under MSME category.

There are only a few big players who contribute to the export growth in this sector. “It takes a minimum of one year for funds to be released when we apply for loans, incentives or subsidies. Not having timely funds have turned several units into NPAs,” said Suresh Naik, an entrepreneur and National President, Tribal entrepreneurs. Many entrepreneurs also called for a reconsideration of GST as several components relating to EME sector fall under 18 pc and 28 pc tax slabs.