Various industry associations had sought a year’s deferment of duty under the phased manufacturing programme (PMP) that was notified on January 8.
The government has reportedly withdrawn its recent notification for levying duties on key mobile handset components such as LCD displays, touch panels and vibrator motors from February 1.
Industry people are rejoicing believing the government’s move to be the first step toward deferring the levy by a year — to April 1, 2020.
Postponing the levy for at least a year will give handset makers enough time to ready the ecosystem needed to manufacture these components, people familiar with the matter told ET.
Pankaj Mohindroo, chairman of the India Cellular and Electronics Association (ICEA), welcomed the government’s decision and said that it is prudent not to impose duty at this moment as there is serious stress in the industry and it won’t be able to absorb any additional cost.
Big relief for handset makers
Handset makers with domestic manufacturing and assembling facilities had raised concern that duties on imported electronic components would increase the cost of locally manufactured mobile phones, making it cheaper to import them.
They were also worried that import duty escalation would kill some 100-odd plants already set up for assembly in the country.
Beginning February 1, import of LCD (display panel) assembly, vibrator motor and touch panel were scheduled to attract 12.5 per cent countervailing duty (CVD) on imports and excise duty of 1 per cent without input tax credit.
The display panel itself accounts for 25-30 per cent of a mobile phone’s production cost and these new duties threaten to disrupt the plans of many handset makers that are locally assembling these phones. These companies had also pointed out that currently there is no ecosystem to locally manufacture those high-value components.
Various industry associations, including ICEA, the Federation of Indian Chambers of Commerce & Industry, the Associated Chambers of Commerce and Industry of India and MAIT as well as Samsung, had sought a year’s deferment of duty under the phased manufacturing programme (PMP) that was notified on January 8.
PMP is the flagship programme under Make in India that aims to make India an electronics manufacturing hub by 2025.