Budget 2022: Rationalise duty, GST for mobile phone industry

The post-pandemic world is, no doubt, laden with new challenges. These also bring in new opportunities, especially for the tech space. Today, a smartphone can do pretty much everything that was being done physically just a few years ago. Our everyday life has become heavily dependent on technology and smartphones today. With online education becoming an integral part of a child’s life, owning a smartphone has become necessary for everyone. In such a situation, we cannot but expect a lenient and rational approach towards the mobile industry from the Union Budget 2022. The mobile phone should be treated as a basic need for every household. When we dream of digital India, we should have a smartphone in every hand. This can only be achieved if smartphone technology is accessible and affordable for everyone. The simplest way to do this is by introducing some sort of subsidy for the mobile phone industry. Let us look back at 2020 when an 18 percent goods and services tax was imposed on mobile phones. This was an increase of almost 50 percent. The India Cellular and Electronics Association (ICEA) has urged the government to reconsider and reduce this to 12 percent. The new rates will not only help domestic manufacturers but also the end-consumers to upgrade to newer technologies with ease. In the 2021-2022 Budget, the duty on manufacturing components of camera modules, PCBA, chargers, power banks, wireless stereo etc. was raised. The current duty on these inputs is close to the import duty on finished parts. The suggestion here is that these rates, too, be revised so that the domestic manufacturers can produce competitive products that benefit both the Indian economy and OEMs. Further, GST on the spare parts should be reduced to promote local manufacturing. PLI or Production Linked Incentive was introduced by the Indian government during the COVID-19 pandemic to meet the then-existing gap between Indian manufacturing and that we saw in China or Vietnam. However, despite the introduction of this scheme, the contribution of Indian mobile companies to global production has dropped significantly to 8 percent currently from 47 percent in 2016. As proposed by ICEA, native manufacturers will benefit hugely from the allocation of Rs 1000 crore for Indian companies. This comes with another proposition that requests the government to offer interest subvention of 5 percent on loans up to Rs 1,000 crore. Now whether the government obliges them will be something to watch out for in the upcoming Budget. Indian companies need the push to get out there and place themselves on the global map. This would not be possible without the intervention and support of the government. And for that, we need to revisit the existing policies. The entire mobile phone industry is looking at the upcoming Budget with great hope and it will be interesting to see how much of it comes true. To sum it up, the Budget for 2022 needs to rationalise the duty and GST for the mobile industry. Technology has turned into a basic necessity of late and the costlier it gets for the domestic companies, the farther away it will get from the Indian consumers. The writer is VP-Finance, Cashify-a re-commerce marketplace. Views are personal. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.