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Tax exemption and regulatory reforms can enable mobile handset industry to grow to $230 billion by 2025, says ICEA and McKinsey

November 19, 2018
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According to a report by Indian Cellular and Electronics Association (ICEA) and McKinsey, a 10-year tax exemption along with regulatory reforms in the mobile handset industry can enable the industry to grow by over 11 fold to $230 billion by 2025. Further, this can create over 4,700,000 jobs in assembly, programming, testing and packaging (APTP) operations, among other fields.

The report highlighted that since 2014, around 120 manufacturing units in the mobile manufacturing segment have come up with support of government policy and on the back of strong domestic market demand. India produced 225 million mobile phones in 2017 worth $20 billion, with exports of around $0.1 billion. As per the report, if India restricts itself to making mobile handsets and components only for India, it would likely be able to manufacture only 450 million handsets and employ 1,800,000 people for an industry worth around $80 billion by 2025.

To this end, the report has recommended a change in current policies around taxes, labour laws and e-waste for orientation of industry towards the overseas market and to attract core manufacturing processes of leading global brands. Further, the report suggested an increase in the import duty drawback rate from the current 1 per cent to 5-6 per cent, easing retrenchment of labour and closing of establishment rules and greater flexibility in working hours.

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