PLIs on One Hand, Corruption on The Other, How Would the Country Prosper
The team at Electronics For You sat down with an India based manufacturing association for an interaction around the PLI for IT Hardware manufacturing, but we got to listen from the horse’s mouth wa
Fortunately (for corrupt officers and officials) or unfortunately (for people who believe in the law), there exists no report that can pinpoint towards the exact levels of corruption in a country. However, the Corruption Perceptions Index (CPI) released by Transparency International (TI) every year, throws some light on the levels of corruption prevailing in a country. This index, for year 2020, has awarded India with 86th rank. It is to be noted here that the Index ranks a total of 180 countries and awards points on the scale of 0 to 100 where 0 defines highly corrupt and 100 very clean.
India has been awarded with a score of 40 for the year 2020. The same score for year 2019 was 41, and India’s rank in the same year was 80. While this simply means that India has slipped six ranks in terms of corruption, experts are of view that CPI does not reflect actual real corruption level in any country. The year 2020, in India, is also known as the year when the Indian government unleashed series of Production Linked Schemes (PLI) for the electronics sector.
While we got on a call with an India based manufacturers’ association to gauge how successful can the PLI for IT Hardware be, the interaction came towards a point wherethe spokesperson, did not shy way from unearthing facts about the levels of corruption in the country.
His strong and uncensored views included why schemes such as PLI, can become greater, if India can curb down corruption and facilitate a better ecosystem for the growth of the electronics sector.
“It is important to curb down corruption to make any scheme, be PLI or any other scheme, successful. Politicians in different states of the country will have to leave corruption for some time. Look at Maharashtra, what’s happening there is unfortunate,” the spokesperson explained.
He added,”My larger message to the central government is…take state governments on board and make them accountable. There has to be a war against corruption. If we do not handle corruption now, we will never be able to drive results in the field of manufacturing electronics.”
Bribing is easier, complaining is harder
Our country is known for the work it has done in the fields of software and services. Bengaluru alone, house over millions of software professionals and tens of thousands of software making companies. However, being into software or services field can be done on a ‘soft basis’, i.e individuals or companies in the vertical of developing software do not need to be physically present at a given location on a given time. Neither does this vertical require physical moving of goods from one state to another, or from India to any other state. Electronics manufacturing on the other hand cannot be done on the soft basis. People need to be present at a definite location at a definite time and goods, whether final or components, need to be moved from one place to another. Even professionals in the design teams need to be present when prototypes are tested, and they also need components physically delivered by different companies.
“Electronics manufacturing is very sensitive. it is a dynamic field and requires presence of professionals at manufacturing facilities. I think India should work on forming a commission that looks into only and only electronics manufacturing. Something like a STPi would be great. This mission should be headed by someone who answers directly to the top authorities and it should encompass manufacturing, design and skills,” the spokesperson explained.
Coming back to the corruption part in India, the spokesperson further added about the situation of trucks carrying electronics components in India. A lot of these trucks, as he informs, cannot cross border of a state into another without bribing the officials posted at different check points. Pointing out towards the GST regime introduced by the government of the country, he noted,”Why does it require stopping trucks and opening packages loaded in them at every checkpoint. What is the GST receipt for then?”
On asked why there are not much complaints to the higher authorities about the problem he adds, “A lot of people do not want to waste their time complaining as they know nothing will happen. Such people find bribing and moving on to be easier than raising a voice.”
“Every transporter wants to make sure that the goods he is delivering reach the destination on time and complaining and add to that time. They find it much easier to bribe officials and carry on with the transport rather than taking up the matter with authorities,” he explains.
Authorities, as per him, are the supreme forces, and it is not tough for them to find errors in packaging, GST invoices and many other things. Even if someone raises voice, he/she will have to pass the same checkpoint in future and meet the same officials there again. Bribery in public services, as per another report by 2020, continues to plague India. Slow and complicated bureaucratic process, unnecessary red tape and unclear regulatory frameworks force citizens to seek out alternate solutions to access basic services through networks of familiarity and petty corruption. This report was published in 2020 and it adds that India has the highest bribery rate in Asia and the most number of people who use personal connections to access public services.
It read, “With the highest bribery rate (39 per cent) in the region, India also has the highest rate of people using personal connections to access public services (46 per cent).”
“Why should a cargo containing electronics subject to so much check when even the Customs department is working on minimising the amounts of checks required to clear consignments from other countries. How can a constable stop a truck, open everything inside it without prior authorization from the higher authorities. Such checks should be based on past criminal records or something like it. The authorities should know that opening such consignments again and again can leave a lot of electronics components contaminated and good for use,” adds the spokesperson added.
He adds, “People bribe to not go through such harassment. This story is not just of one checkpoint and most of them. It is like corruption in India is slowly transforming into extortion.”
Getting electricity connections for a manufacturing through bribing
Manufacturing of electronics is a delicate process and requires a stable voltage and electricity connection. Now, while the discussion around the electricity infrastructure in India can be put aside for a different time, the spokesperson did not shy away from the situation electronics manufacturers have to go through to obtain a new electricity consumption for commercial use in different parts of the country.
“It is very difficult and very exceptional that someone will get a new electricity connection without bribing the officials. Industry does not get it ant any subsidisied rates and pays handsomely for the amount of electricity it uses. Now if such companies are consumers of the government then why should they pay bribes to get these connections. Isn’t this the government’s duty to make sure that no such practices are encouraged?” says the spokesperson.
Pointing towards the industry guys he adds, “Even the industry guys are silent on this. It is as if that we are still living under the colonial rule. They are still scared that the government will arrest them. There exists no protection system of whistle blowers in India That is why I always say that in lot of cases there exists no rule of law.”
The PLI schemes, like many other schemes, promise subsidies and incentives to electronics manufacturers. The spokesperson points out that getting eligible for receiving such subsidies and getting these subsidies as two different things. He says that in most of the cases one cannot get subsidies without paying bribes.
“We need the same approach that has helped Gujarat become number one state for investments in India. Narendra Modi, when he was chief minister of the state, built a system that made sure that complains against corruption get redressed within a limited period of time. Others states need to follow the same if they want to grow,” explains the spokesperson.
Why does the corruption exist now if we have the same CM as the Prime Minister of the country? On being asked this question the spokesperson replied that It does not matter how good the central government is working unless the state governments complement the policies and practices. Giving another example he said, “Some states are promising subsidies worth Rs 100’s of crores for electronics manufacturing. These subsidies are practically impossible.”
His concluding remarks,”From port to everywhere there is corruption. Either you pay directly or your service provider pays on your behalf. You think consignments through Bombay customs get through without paying anything. You get harassed for even importing components that are duty free. These people are to be held responsible. They follow absolutely foolish approach. If the prices of a component do not match the prices internet shows, they get one more point to harass us. If I buy components as per prices on the internet, how will I do business! These are all local issues that bother business men all around the country. If I complain today, I will get arrested tomorrow, and this is why people do not complain.”
He adds, “Weights and measures is another department that harasses a people a lot. This exists especially in states of Karnataka. The law there is absolutely draconian. They can pull you up by saying that the fonts on the invoice are not clear. There cannot be shredding on ink on paper in states like Karnataka. They do it for all the cherry brands!”