The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged the government to extend income tax waivers to mobile handset manufacturers in backward areas from the current period of five years to 10 years, to help local industry meet 100 per cent local demand for cellphones. It also seeks a waiver of customs duty on cellphones. In addition, the chamber demanded withdrawal of the safeguard customs duty of 1 per cent on mobile handsets with immediate effect, to help broad base the cellphone sales through reasonable prices.
Swati Piramal, president, ASSOCHAM, in a representation submitted to the Ministries of Telecommunications, Commerce and Industry, and Finance, sought that value added tax (VAT), which currently varies between 6-14 per cent, should be lowered to less than 4 per cent.
According to ASSOCHAM, the import duty is a barrier, preventing new entrants from setting up mobile handset manufacturing units since even after setting up of a plant, it is not feasible to initially meet 100 per cent demand locally and thus, the transition to support manufacturing should be done. The imposition of customs duty on mobile handsets will also impact their competitiveness.