A top government official has advocated continuation of differential rate of duty and incentives when the Goods and Services Tax (GST) is implemented, highlighting the impact it can have on local manufacturing.
“As far as department of IT and electronics and Department of Telecom is concerned,” Telecom Secretary JS Deepak said, “we believe that differential duty structure has had a very important role to play in seeding the manufacturing of mobile phones in India.”
These measures, required along with incentives to offset local disabilities, shouldn’t be a permanent feature, he said while speaking at an industry event. “We’re advocating that these kind of benefits should continue for a while; how it is to be done is work in progress.”
Mobile phone manufacturers had approached the government, more recently the finance ministry, seeking continuation of the differential duty structure and the benefits that come with it, which they fear may become a casualty when the GST comes into effect.
Absence of these incentives could put at risk a manufacturing industry that is now worth Rs 54,000 crore and is expected to grow to Rs 94,000 crore by the end of this fiscal year, they said.
If the duty differential is not continued, it may also threaten the proposed Phased Manufacturing Programme that seeks to make 1.2 billion mobile phones — worth Rs 15 lakh crore by 2025-26 and potentially employing 5.8 million people, handset makers said.
The industry has demanded that the government keep at least a 10% duty differential between imported and locally made handsets in the GST regime to ensure that the Make in India proposition for mobile phones remains attractive.
The telecom secretary said as per the Prime Minister’s Digital India vision, which talks of broadband for all, electronic manufacturing and design in India will continue to be promoted. “There should be comfort in the industry that policy and regulatory framework would be supportive,” he said.
Deepak said India is well on its way to becoming a global hub for mobile phones manufacturing.