Mobile phone industry seeks tax rationalisation, clarity on export incentive cut

PTI
Monday, 16 December 2019

"Many have emphasised that some schemes that are on the anvil can be brought in quickly like some incentives for large-scale manufacturing. There are a number of incentives," Electronics and IT Secretary Ajay Prakash Sawhney said

NEW DELHI: IT hardware and mobile manufacturers on Monday sought clarity over recent reduction in export incentives and demanded rationalisation of tax structure, including GST rate on handsets, during a pre-Budget meet with Finance Minister Nirmala Sitharaman.

According to the India Cellular and Electronics Association (ICEA), reduction in export incentives will lead to massive job losses.

"Many have emphasised that some schemes that are on the anvil can be brought in quickly like some incentives for large-scale manufacturing. There are a number of incentives," Electronics and IT Secretary Ajay Prakash Sawhney said after the pre-Budget meeting.

On the meeting, ICEA Chairman Pankaj Mohindroo said the government has strong intention to support Indian companies as well as attract global brands to make the country a hub of mobile manufacturing.

"Regarding export benefits... we have requested that the air be cleared. There is an incentive package being worked out for global value chain and Indian companies to meet mobile export target of USD 110 billion as per the National Policy on Electronics. We have put forward a request (on this) strongly," Mohindroo said.

The meeting was attended by technology industry bodies ICEA, MAIT, Nasscom, Telecom Equipment Manufacturers Association of India, Indian Private Equity and Venture Capital Association, besides representatives from Apple, Lava International, and Jio Mobiles, among others.

"Exports in the electronics industry is highly dampened and have a negative impact on investments in this sector. Electronics exports will be hit hardest without MEIS. Reinstating the MEIS is the need of the hour for continued exports," MAIT Chief Executive Officer George Paul said.

According to the Internet and Mobile Association of India (IAMAI), the mobile phone industry is looking forward to 8 per cent export incentives.

"To support electronics exports, 4 per cent special incentives are being offered under MEIS to the electronics sector. The mobile handset manufacturing industry has been interacting with the government on this issue and is awaiting an increase in the export incentive to 8 per cent to make India globally competitive and become a manufacturing hub," IAMAI said.

On December 7, the Directorate General of Foreign Trade reduced export incentives on mobile handsets from 4 per cent to 2 per cent.

"We have requested that basic customs duty on high-end phones be capped at Rs 4,000. We are witnessing a lot of grey market being developed which should be stopped," Mohindroo said.

The mobile phone industry has also requested the finance minister to rationalise GST on mobile handset priced below Rs 1,200 to 5 per cent from 12 per cent at present as it will benefit 15 crore people who buy feature phones, Mohindroo said.

The Electronic Industries Association of India (ELCINA) demanded a dedicated fund for the development of component manufacturing ecosystem which should be floated on the lines of a venture fund with income tax breaks on its earnings.

ELCINA Secretary General Rajoo Goel said the government should again bring in a scheme on the line of modified special incentive package to boost large-scale electronics manufacturing.

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