Mobile handset makers operating in India expect the government to continue duty differential regime for mobile phones in the upcoming budget, amid business slowdown due to demonetisation and the imminent implementation of goods and service tax (GST) regime.

Some feel that while the government should enable environment to make mobiles cheaper in India, to make the country an export hub for electronics amidst growing competition, the Budget should include tax holidays and duty exemptions on capital goods imports to strengthen the Make in India proposition, for new and existing companies.

“A 10-year tax holiday for local mobile manufacturers, continued differential duty structure to encourage enhanced local manufacturing in India and increased incentive (as cashback) under Merchandise Exports from India Scheme (MEIS) scheme to 5% from the current level of 2% would go a long way in making India an export hub,” Ritesh Suneja, group Chief Financial Officer at Lava, told.

The industry is also expecting exemption of duty on import of capital goods used in the manufacturing of mobile handsets and components, besides redrawing of electronic waste norms, which some feel are regressive and unpredictable.

The 2017 Union Budget is scheduled to be tabled in Parliament, February 1.

In formal presentations that have been made to the government, the industry comprising of handset and component makers have proposed that components such as the keypad, USB cable, mic and receiver, die-cut parts and manufacturing of metal and plastic sub-components attract lower duties or levies.

When imported, these parts should be charged a higher levy – about 12.5% higher – akin to the differential duty regime offered for locally-made mobile phones, chargers, batteries and headsets. This will give a boost to both, the Make in India scheme and domestic component manufacturers.

The Indian Cellular Association (ICA), which represents all major handset makers such as Apple, Samsung and Micromax, among others estimates that imports of mobile phones are expected to drop 30% by value in this fiscal to Rs 40,000 crore, from 110 million phones.

The duty regime has attracted more than 40 odd companies to make phones locally, leading to creating Rs 54,000 crore worth of locally-made phones in 2015-16, which is set to rise to Rs 94,000 crore this fiscal end, from 175 million units.

Source: Times Now