In a bid to boost the Make in India campaign initiated by Prime Minister Narendra Modi, handset makers have asked the government to bring down the duties on mobile components. The manufacturers have proposed that the upcoming Union Budget to bring components such as the keypad, USB cable, mic and receiver, and die-cut parts under the differential duty regime offered for devices made in India. The regime would make such components and manufacturing of metal and plastic sub-components attract lower duties.
The industry is also seeking duties to be imposed if the same components are being imported by manufacturers similar to the higher duties imposed on mobile phones, chargers, batteries and headsets. The Indian Cellular Association (ICA), which represents all major handset makers such as Apple, Samsung and Micromax, among others, said that the principal of duty differential, phased manufacturing programme (PMP) and their continuation in the GST regime is crucial for a robust manufacturing ecosystem.
It will further strengthen India’s position as a global mobile phone manufacturing and export hub, a report on Economic Times notes.
The Make in India initiative stresses upon bringing manufacturing processes into the country and making the product development cycle self-sufficient. At the centre of this initiative is technology and mobile phones in particular. This is also aimed at generating more employment in the country. Following the roll out of the campaign, a lot of companies have set up their mobile manufacturing units in India.
In the past one year, around 40 mobile manufacturing units have been set up in India, resulting in generation of more than 40,000 jobs. “India imports electronic goods of over Rs 3 lakh crore. By 2020 government aims to bring down import to zero,” Minister of State for IT and Law P P Choudhary said at the time of announcing The Electropreneur Park which is an incubation centre in Delhi and set up with government funds of around Rs 21 crore to support incubation of up to 50 companies. Set up in collaboration with academia and industry represented by Indian Electronics and Semiconductor Association, the Park focuses on creation of intellectual property rights and product development to increase domestic manufacturing of electronics items.
ICA has estimated that imports of mobile phones will drop 30 percent by value in this fiscal to Rs 40,000 crore, from 110 million phones. The second level of PMP, under which exemption for the new set of components is being proposed, is estimated to create 1.5 million jobs by 2020 and 5.8 million by 2025-26.
Based on the copy of the proposal, attained by Economic Times, ICA and Consumer Electronics and Appliances Manufacturers Association, along with handset makers have written to the government last month, asking that differential duty benefits be continued even when the goods and services tax (GST) comes into effect.
Currently, imported mobile phones are levied a 12.5 percent countervailing duty while 1 percent excise duty is levied on domestic manufacturing, making local assembly 11.5 percent cheaper. The industry had also proposed 0 or 1 percent central GST and state GST at a 5 percent merit rate on all phones and tablets, along with their inputs and components, irrespective of whether they are imported or local.