Aimed at boosting ‘Made in India’ mobile phones and its components, the upcoming budget is likely to propose lower duty on domestically-produced handsets and parts including keypad, USB cable, and receiver.
Officials in the Ministry of Electronics and Information Technology suggested to the Ministry of Finance in the pre-Budget meeting that if duty on locally-produced parts reduced, it would not only encourage domestic manufacturers to produce more components, but will also reduce the cost of smartphones made in India.
With 42 mobile phone manufacturers and 15 component manufacturing units having already set up their plants in India, by giving tax sops to parts-makers, the country can attract more such companies, an official in the ministry said.
Earlier, the Indian Cellular Association (ICA), which represents all major handset-makers, had suggested the government to lower the duty on India-made components such as USB cable, keypad, receiver, and manufacturing of metal and plastic sub-components, and to impose more tax on imported goods.
The country has generated Rs 540 billion worth of locally-made phones in 2015-16, and it is set to reach close to Rs 1000 billion by this fiscal. Noida, Gurugram, Pune, and Hyderabad emerged as major hubs for mobile phone- and component-makers.
Currently, imported mobile phones are levied a 12.5 per cent countervailing duty, while 1per cent excise duty is levied on domestic manufacturing, making local assembly 11.5 per cent cheaper. The same difference was extended to chargers, batteries and headsets in the last Budget.
Globally, the electronics industry is looking for new destination, following the high cost of manufacturing in China, and India is trying to attract more companies, said the official.