The India Cellular and Electronics Association (ICEA), in its pre-budget recommendations, has requested the government to roll-back goods and services tax (GST) from 18 per cent to 12 per cent. ICEA believes it to be a deterrent for growth of domestic market and manufacturers as well as checks in adoption of mobile phones by disadvantaged sections in rural India. ICEA has sought reduction in import duty on parts used for making mobile phones as this will make the products manufactured in India under the recently announced production linked incentive (PLI) scheme, globally uncompetitive.
As per estimates, the government expects mobile phones worth Rs 10.5 trillion to be manufactured under the PLI scheme. In addition, ICEA has called for rationalisation of duties on the mother boards (printed circuit board assembly), mechanics components, etc. used in mobile phones as well on components used for making mobile phone accessories like lithium ion cell for power banks, raw materials for wireless and audio devices etc.. The industry witnessed a substantial hike in GST rates by 50 per cent in March 2020 to 18 per cent from 12 per cent. This should be rolled back to the previous rate as it slows down the digital India campaign and deters growth of manufacturers.
In contrast, the pre-GST era had the excise duty plus VAT at 6 per cent (in most states), and the weighted average was 7.2 per cent. All components, parts and accessories were at zero duty for manufacturing.
ICEA has also recommended government to allocate Rs 10 billion to support Indian companies, provide them interest subvention of 5 per cent for loans up to Rs 10 billion, credit guarantee for up to Rs 5 billion (revolving) for fixed and working capital requirements and domestic companies falling under PLI scheme should be provided enhanced credit guarantee of Rs 10 billion.
