India Cellular and Electronics Association (ICEA) has batted for rationalisation of duties on parts and components of mobile phones and sub-assemblies, saying some of the smaller tariffs should be done away with, while all inputs duties on ‘mechanics’ should be removed immediately.
The industry body has also suggested that the government should ease the Basic Customs Duty (BCD) on high-end phones.
The 20% customs duty on high-end phones should be continued only with a maximum BCD pegged at ₹4,000 per device, the association has said in its Budget wishlist.
Finance Minister Nirmala Sitharaman will be presenting the Union Budget 2023-24 on February 1. ICEA contended that tariffs on inputs and components are a barrier to increasing localisation.
It has said that some of the smaller tariffs should be done away with, to support local businesses and bring ease of doing business. In this regard, ICEA suggested that the tariff of 2.75% (including social welfare surcharge), among other smaller tariffs which has "no beneficial impact and only create a burden for legitimate manufacturers", need to be removed.
ICEA further noted that the duty on the ‘mechanics’ is high, and added that all inputs duties on mechanics should be removed, immediately.
"The Indian mobile industry has witnessed tremendous growth in the past few years and stood on its feet in a very short span of time backed by the supportive and pragmatic policies of the government. The electronics and mobile market too has become more vibrant and mature in the country," Pankaj Mohindroo, Chairman, ICEA said outlining the industry's budget recommendations.
ICEA represents leading mobile phone makers and electronics industry players.
Mr. Mohindroo said the government should look at incentives in the form of rationalisation of duties on parts and components of mobile phones.
Additionally, open cell is a hugely capital-intensive industry, and it is important to encourage it. However, the duties imposed on cells and chip on film (COF) have created an inverted duty structure for the manufacturing of open cells in India.
ICEA recommends reducing the inputs of the open cell at nil duty. On easing the BCD on high-end phones, ICEA noted that currently, the grey market for high-end phones has swelled leading to a revenue loss of over ₹4,000 crore.
"We strongly recommend augmenting the domestic market for high-end phones by reducing duties, which will also shift the ancillary ecosystem (including after-sales) to India with more strength," ICEA suggested.
The association emphasised that a stable tariff regime for inputs is important, as stability is paramount for the industry. Tinkering in tariffs for inputs on a constant basis makes it difficult for manufacturers to operate in a viable manner, ICEA said adding that exemption notification should also have a sunset of at least five years.
