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Last Updated : Oct 17, 2018 11:50 AM IST | Source: Moneycontrol.com

Flex threatens to move production out of India due to red tape: Report

The $26-billion company said that if the promised concessions are not delivered, it will move production from Sriperumbudur in Tamil Nadu to Malaysia

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Contract electronics manufacturer Flex has threatened to move its production out of India, alleging that government processes in the country are stuck in 'red tape', The Times of India reported.

The $26-billion company said that if the promised concessions are not delivered, it will move production from Sriperumbudur in Tamil Nadu to Malaysia.

The US-based company had made a request in August to allow its Chennai unit to source duty-free products from its second unit within a special economic zone (SEZ) at the same location. It claimed that there has been no movement on the request as yet.

The tech manufacturer also claimed that government had not addressed another of its requests -- one for a duty relaxation for six months during which a new factory would be set up in Andhra Pradesh -- despite the IT and commerce ministries having supported it.

Flex wrote to the IT Secretary Ajay Sawhney, Commerce Secretary Anup Wadhawan and Finance Secretary Hasmukh Adhia, asking for their intervention to help cut through the red tape. The company has to deliver an annual order of 96 million phones for an Indian mobile company.

To fulfil these demands, Flex needs to source from the SEZ, as its Chennai unit does not have the capacity to meet the order. The company wants to subcontract the job work of 15 million phones to its SEZ for six months.

The company has also asked for a waiver of the mandatory 20 percent customs duty. It had earlier been given an exemption for power generation, transmission and distribution of power from an SEZ into a domestic tariff area.

Such a relaxation would be like duty-free imports that are allowed from the ASEAN group of countries, Flex said.

During this time, the company will train 5,000 locals and invest $200 million in another factory in Andhra Pradesh, as manufacturing is a big agenda in India under the government's 'Make in India' initiative.
First Published on Oct 17, 2018 11:50 am
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