PROJECT REPORT

Mahindra World City, Jaipur signs PERTO S.A. from Brazil

Submitted by: Section A Group 7

Aparna A - 11A GauravTiwari - 16A RanajayChoudhuri - 33A Sahajeevan D - 37A Vijay BhaskarAleti - 47A

Table of Contents
The News ................................................................................................................................................ 2 About Perto ............................................................................................................................................. 2 HS Codes ............................................................................................................................................. 2 About Mahindra World City ..................................................................................................................... 2 Whats in it for India? .............................................................................................................................. 3 Current Scenario of electronics in India................................................................................................ 3 How should India meet the rising demand ........................................................................................... 3 Imports................................................................................................................................................ 4 Information Technology Agreement of WTO .................................................................................... 4 Promote local manufacturing .............................................................................................................. 4 Electronics Manufacturing Clusters Scheme ..................................................................................... 5 MSIPS - ............................................................................................................................................ 5 Conclusion ........................................................................................................................................... 5 Whats in it for Perto? ............................................................................................................................. 6 Why did Perto choose MWC in Rajasthan? .......................................................................................... 6 Mahindra World City ....................................................................................................................... 6 Delhi Mumbai Industrial Corridor..................................................................................................... 6 Will Perto export or manufacture for local market? ................................................................................. 6

The News
Perto S.A. will set up its first fully integrated manufacturing facility in India on 26 acres of land within the Domestic Tariff Area of Mahindra World City, Jaipur. The new facility will commence with an initial investment of around Rs. 200 crores and is expected to provide employment to over 1,000 people.
link to the News

About Perto
Perto is active on an OEM basis in the segments of - Banking automation - Self service terminals - Payment systems - Cash dispensing mechanisms and depository mechanisms. Perto's headquarters are located in Gravata near the city of Porto Alegre in southern Brazil. click here for more info on Perto

HS Codes
The HS code for the ATM and Cash Dispensing Machines: 847290 Automated Bank Note Dispenser 847340 - Parts and accessories of the machines of heading 8472 source of HS Code

About Mahindra World City

Mahindra World City (henceforth referred to as MWC), Jaipur is a 3,000-acre business city with a 2,500acre multi-product SEZ. Highlights: Promoted by the Mahindra Group and the Rajasthan State Industrial and Investment Corporation (RIICO) Multi-product SEZ with dedicated zones for IT / ITeS, Light Engineering and Auto Components, Handicrafts, Apparel, Gems and Jewelry, Warehousing and Logistics and a Domestic Tariff Area (DTA) Spread over 3000 acres and located on the Golden Quadrilateral, situated off NH8, 18 kms from the airport and 21 kms from the railway station Falls under the DMIC click here for more info on Mahindra World City

Whats in it for India?

Current Scenario of electronics in India

Source: http://www.cii-iq.in/ The demand is projected to increase at a CAGR of 22%.

How should India meet the rising demand

Imports Local Manufacturing

Imports
India can meet the rising demand by imports and growing demand would mean rising revenue for the state. But, there is an issue in this. International Technology Agreement (ATA) of WTO. Information Technology Agreement of WTO India is signatory to ITA and has agreed to reduce the duty to zero for a large number of electronic components and products including the once being manufactured by Perto. Under the Information Technology Agreement-1 (ITA-1) of the World Trade Organization (WTO), which came into force in 1997, a large number of electronic components and products are bound with zero tariffs making trade unrestricted across international borders. Under the Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with various countries, the import of electronics hardware from these countries is allowed either at zero duty or at a duty which is lower than the normal duty rate. India is a signatory to ITA-1 Link to the member nations and their commitments From Indias commitments list we find that the duty has been reduced to zero for: 847290 Automated Bank Note Dispenser 847340 - Parts and accessories of the machines of heading 8472 Source of HS Code Indias commitment under ITA-1

Imports will lead to widening trade deficit and will not bring any revenue to the state. Hence, imports are not the solution.

Promote local manufacturing

Steps taken by India to promote local manufacturing and increase exports are -

National Policy on Electronics As part of the vision to make India a leading destination for the Electronics Systems Design and Manufacturing Sector (henceforth referred to as ESDM), the draft National Policy on Electronics (NPE) proposes to achieve a domestic production of about USD 400 Billion by 2020 in the ESDM sector by creating an industry friendly policy framework and ecosystem which provides a level playing field for the domestic industry. Link to the news about the approval - Oct 25, 2012 Electronics Manufacturing Clusters Scheme Electronics Manufacturing Clusters Scheme to provide world-class infrastructure for attracting investments in the Electronics Systems Design and Manufacturing Sector. Some incentives under this scheme: (i) The assistance would be provided to a Special Purpose Vehicle (SPV) which should be a legal entity duly registered for this purpose. The SPV may be promoted by private companies, industry associations, financial institution, State or Local governments or their agencies and units within the EMC. (ii) The financial assistance to the SPV shall be in the form of grant-in-aid only. For Greenfield EMCs the assistance will be restricted to 50% of the project cost subject to a ceiling of Rs. 50 crore for every 100 acres of land. For Brownfield EMCs the assistance will be restricted to 75% of the project cost subject to a ceiling of Rs. 50 crore. click here for EMC Scheme approval by the cabinet on July 04, 2012 MSIPS - Modified Special Incentives Package Scheme MSIPS scheme provides refund of capex for new units or for expansion of more than 25% of existing capacity in a DeitY Notified Greenfield or Brownfield Electronics manufacturing cluster for production of products across ESDM value chain. Government has allocated Rs 10,000 Crore for 12th FYP for MSIPS Scheme. The scheme is open for all initial applications which are received by DeitY on or before 26-07-2015. Investment for the purpose of MSIPS will have to be done before 10 years from approval of their application.
click here for more on MSIPS

Conclusion
India needs local manufacturing to meet the rising demand for electronics goods. Accordingly, India is giving a lot of incentives for local manufacturing, thus attracting the electronic goods manufacturers like Perto.

Whats in it for Perto?

Perto will get access to the large local market of India. As it is setting up the manufacturing facility in DTA, it is eligible for the incentives under the MSIPS scheme.
Some incentives under MSIPS are as under: 25% of capital expenditure if the ESDM unit is in non-SEZ and 20 % of capital expenditure if the ESDM unit is within SEZ. This capex subsidy is available for investments made within 10 years from the date of approval of the project. Reimbursement of CVD/excise on capital equipment for non-SEZ units. Reimbursement of central taxes and duties (like custom duties, excise duties and service tax) for 10 years in select high- tech units like fabs, Semiconductor Logic and Memory chips, LCD fabrication. click here for more on MSIPS

Why did Perto choose MWC in Rajasthan?

Mahindra World City
MWC, Jaipur has provision for a dedicated Logistics and Warehousing Zone for manufacturing companies in order to provide complete end-to-end solution. Social Infrastructure zone is poised to create a World class living space, having all modern facilities like housing, educational institutes, hospitals, recreational zones, shopping complexes, hotels and such other facilities. It is one of 16 projects worldwide to be part of the Clinton Climate Initiatives (CCI) effort to create Climate Positive cities.

Source: News Delhi Mumbai Industrial Corridor

Mahindra World City falls under the ambitious DMIC. It will have good infrastructure and export friendly policies. Thus, it made sense for Perto to set-up a manufacturing base in Jaipur. Click here for more information on DMIC

Will Perto export or manufacture for local market?

Perto will set up its manufacturing facility within the Domestic Tariff Area. Hence, it will manufacture products for the local market.