Handset makers pursue on import duty hike cancellation
By MYBRANDBOOK
Mobile handset manufacturers have sought rollback of increased import duties on inputs for chargers, power banks, camera modules and printed circuit board assembly (PCBA), among other items, in the upcoming budget.
The duties were hiked in the 2021-22 budget. Pankaj Mohindroo, chairman of the India Cellular & Electronics Association, said in a letter to Union Minister of State for IT, Rajeev Chandrasekhar, that raising tariffs on components makes import of the whole part cheaper than manufacturing them in the country. ICEA has complained that these tariffs “were imposed suo motu by the Department of Revenue.”
The industry has argued that incentives under the government’s flagship Production-linked Incentive (PLI) scheme conflict with the increase in custom tariffs on inputs. “The PLI scheme is aimed at decreasing the existing cost disability in India versus China and Vietnam,” the industry body said, adding that any increase in customs duties on inputs will increase this cost disability. So, it is contrary to the core policy objectives of the PLI scheme as this leads to increase in imports rather than import substitution.
In the case of chargers with the right policies, India was able to establish a charger industry with more than 60 manufacturing units producing over 600 million chargers, which were being exported as well. It said the additional duty impact after the 2021-22 budget has been 6-7% on the bill of materials of chargers.
The industry body has also sought replacement of the 20% basic customs duty currently prevalent on all handsets above Rs 20,000. Pegging the loss of revenue at Rs 2,500 crore annually due to smuggling of these phones, ICEA said “a high BCD will not encourage companies to manufacture high-end phones in India, and its removal or rationalization will not change their plans to shift manufacturing from China to India.”
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