Tax holiday, customs duty exemption, GST cut on handset cos’ budget wishlist : 20-06-2019

NEW DELHI: India’s handset industry has sought a special package to help home-bred companies be competitive in a market increasingly dominated by the Chinese companies and the South Korean Samsung, besides tweaking of the local manufacturing policy to push exports from the country, as part of its budget recommendations to the government. 

The industry has also sought a decade-long tax holiday on profits from manufacturing devices or parts in the country to stimulate fresh investments. The industry has also suggested that printed circuit boards assembly (PCBA) of feature phones up to Rs 1200 should be exempted from basic customs duty till the year end, and that goods and services tax (GST) rate on batteries and chargers be reduced to 12% from the current 18% to 28%. 

“There’s a compelling need to make a comprehensive strategic support framework of building large domestic companies in order to have a desired level of control on technology in the strategic areas,” the Indian Cellular and Electronics Association (ICEA), said in its recommendations to the government 

The association which counts companies such as Apple and Google among its members, said that Indian companies must be supported to tap into sub-$200 devices global market which is worth over $250 billion. 

“A 10-year tax holiday may be granted on a block of 15-20 years on all profits and gains under Section 80 IA, for manufacturing or rendering of service or in relation to mobile handsets, its parts, components, accessories and various core components… so as to bring fresh investments in plant and machinery in SEZ, EOU and DTA,” the association said. 

Mobile phone manufacturing has been the bedrock of growth of the government’s Make in India programme. In 2018-19 financial year, about 290 million phones were produced valued at Rs 1.7 lakh crore. 

While imports have reduced to 7% of the overall phones in the last fiscal, from 82% in 2014-15, the government should make exports a focus of the phased manufacturing programme to establish India as a manufacturing hub, and in turn, accelerate local manufacturing. 

This will also aid component manufacturing, which should bring revenue of nearly Rs 1 lakh crore by this fiscal end, up from last fiscal levels of Rs 75,000 crore, ICEA said. 

Among the other suggestions to the government, the handset industry raised the issue of royalties on standard essential patents, which it reiterated should be based on the value of the patented feature and not the value of the entire product 

It added that 10% duty on PCBA of feature phones up to Rs 1200 should be removed for at least a year, to support companies engaged in this segment. 

ICEA also flagged the issue of under-invoicing of feature phones being imported into India, and suggested that a minimum import price of Rs 500 be kept for every feature phone, which will prevent losses to the exchequer. 

Source : Economic Times

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