Make in India: Handset makers want lower duties on locally made components

Handset makers have requested for a relaxation in the upcoming Union budget on duties and levies imposed on mobile components made locally in the country. According to a report, the industry wants components made in India like keypad, USB cable, mic and receiver, die-cut parts and manufacturing of metal and plastic sub-components to have lower duty costs. They have also requested that the same components, when imported, should be charged a higher levy. This will give a boost to the Make in India scheme as well as local component manufacturers. Presently 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 same difference was extended to chargers, batteries and headsets in Budget 2016. Indian Cellular Association (ICA), which represents all major handset makers such as Apple, Samsung and Micromax, said, “Domestic manufacturing of mechanics is a major transformation for the industry. The principle of duty differential, phased manufacturing programme (PMP) and their continuation in the GST regime are crucial for a robust manufacturing ecosystem. It will strengthen India’s position as a global mobile phone manufacturing and export hub.” India generated Rs 54,000 crore worth of locally-made phones in 2015-16, and is expected to go up to Rs 94,000 crore by this fiscal, from 175 million units. The ICA predicts that imports of mobile phones will drop 30 percent by value in this fiscal to Rs 40,000 crore, from 110 million phones. It also added that the proposed exemption for the new set of components  is estimated to create 1.5 million jobs by 2020 and 5.8 million by 2025-26.