Govt mulls offering more duty incentives to smartphone manufacturers to promote exports; plans 6% duty credit scrips

In a bid to give a fillip to the Make in India mission and increase exports from the country, the government is reportedly planning to extend more duty sops to mobile phone makers for promoting exports from the country, said a news report.

A proposal which is under the government’s consideration pitches for increasing duty incentives to the smartphone makers like Apple, Oppo, Vivo and Samsung through extending duty credit scrips of 6 percent instead of the current 4 percent scrip, according to a report in The Economic Times quoting people in the know of the matter. Duty credit scrip is a certificate with certain monetary value that can be utilised for payment of customs duty.

The government has set a goal to increase smartphone exports from the country to $110 billion by 2025 from $3 billion now, the report said.

In September this year, the government had exhorted iPhone maker Apple to expand manufacturing base in India and use the country as an  export hub  as it promised to line up fresh incentives and sops to galvanise electronics as well as phone industry in the coming two to three months.

Apple’s manufacturing investment so far is only the “tip of the iceberg”, IT Minister Ravi Shankar Prasad said, adding the government wants global giants like Apple and Samsung to have a “robust presence” here.

“India will offer you the human resource, investor-friendly policies, and incentives for making in India, and for exports,” the minister said after holding a CEOs roundtable with over 50 electronics and phone companies.

Apple and Samsung are international players and should work as a team with domestic companies to transform India into a global powerhouse, he said, adding he did not foresee any conflict of interest between the two sides.

In July this year, the Internet and Mobile Association of India (IAMAI) had urged the government to provide both production-based and export-oriented incentives to make domestic manufacturing of mobile handsets competitive, said a report in The Hindu Business Line.

Countries like China and Vietnam were offering incentives to the mobile handset industry to make their domestic manufacturing competitive while in India there were several hurdles as compared to competing markets such as China, Vietnam, Indonesia and Mexico, the report said.

In February this year, the government had deferred a plan to tax imports of touch panels after smartphone makers such as Samsung Electronics asked the government to delay levying tariffs on such new imported components under a phased plan to boost local manufacturing, reported Reuters.

The tariff, which was supposed to kick in from February, has been delayed after considering industry demands, a government official told Reuters.

In January this year, smartphone makers in India had called for export credits on devices and tariff cuts on machinery imports as part of measures they say will make Asia’s third-biggest economy a global smartphone manufacturing hub, reported Reuters.

The India Cellular and Electronics Association, (ICEA), whose members include some of the industry’s biggest names including Apple Inc, made the proposals in a 174-page document reviewed by Reuters and submitted to the government ahead of its annual budget announcement next week.

“As the country is nearing to achieve saturation point… without an export take-off manufacturing growth cannot be sustained and accelerated,” the ICEA said in the document.

In August last year, the ICEA report said that driven by the government’s “Make in India” initiative, the mobile handset manufacturing eco-system in the country helped save a whopping Rs 3 lakh crore by replacing imports of completely built units (CBU) with locally manufactured and assembled handsets during the past four years.

In 2017-18, over 225 million handsets were assembled/manufactured in India which was approximately 80 percent of the total market requirements, according to the ICEA.

In April last year, China’s Xiaomi had said it wanted its global smartphone component makers to set up base in India, in what could potentially bring as much as $2.5 billion of investment to the South Asian nation and create as many as 50,000 jobs.

If all 50 suppliers were to set up shop in India, it would bring in $2.5 billion in investment and create as many as 50,000 jobs, Xiaomi said.

Xiaomi itself now has six smartphone manufacturing plants in India, its biggest market behind China.

— With inputs from agencies