Indian phone makers seek higher tax on imports to boost local manufacturing

The NDA government at the center may feel quite pleased that its Make in India campaign is at last having a good effect with the mobile phone companies having manufacturing arrangements in the country are now demanding that the customs duty on imported handsets be increased and the imported components also taxed to ensure a level playing field for the domestic manufacturers. Interestingly, those demanding this imposition include the big names like Apple and Samsung, apart from the homegrown Micromax.

The Indian Cellular Association has put forward these proposals to the Finance Ministry, which is in the process of collecting the views of the different industry segments ahead of the Union Budget to be presented in February. The industry body has also asked for a 10-year tax holiday within a block of 15 to 20 years for the units setup in special economic zones, export-oriented units and domestic tariff areas.

It may be recalled that the government had increased the customs duty on imported mobile handsets from 10% to 15% recently. The Indian Cellular Association has now demanded that this be increased to 20%. They have demanded that the duty on components is also suitably calibrated and levied.

In addition to these, the industry body has represented to the Finance Ministry that all measures, like anti-dumping duty may also have to be taken to protect the manufacturers in India from any threat to them from cheap imports. They feel with such measures, India can emerge as a manufacturing hub like China and Vietnam for making mobile handsets contributing handsomely to exports even. The industry is prepared to accept reasonable conditions that the government may impose, with regard to factors like value addition etc., so that genuine players in the industry alone are the recipients of the benefits.  

In the three years since the current government launched the Make in India scheme, 107 units have sprung up, which support companies like Apple, Samsung, Vivo and Oppo in making and supplying various components for them.

The statistics emerging from the industry are also pointing in the same direction. While imports in 2017 have declined 60% from the previous year, the domestic contribution, in terms of mobile handsets sold has jumped by 47% in value terms and reached 225 million in absolute numbers.

Looking ahead, the industry estimates that the annual value of production of mobile phones could touch Rs 3.5 lakh crore by 2019 from the current levels of Rs 2.5 lakh crore. This represents 500 million units made in India. This will also open up the avenue to export 120 million units by 2019 valued at Rs 100,000 crore. When looked at this year’s figure of Rs 6000 crore as exports income, this might sound quite ambitious.