The India Cellular and Electronics Association (ICEA) has demanded a reduction in import duty on parts used for making phones. The industry body said that increase in taxes on components makes the domestic products manufactured under the PLI scheme globally uncompetitive.

The ICEA in its budget wishlist has demanded a reduction of goods and services tax (GST) to 12% from 18% as it is a barrier to the growth of the domestic market and putting mobile phones in the hands of disadvantaged sections in rural India.

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The industry body in its letter to the Ministry of Electronics and IT said that the production linked incentive (PLI) scheme offers an incentive for meeting partial cost disability for production in India compared with other countries such as China and Vietnam that existed before January 2020.

Mohindroo said that after the change in duty structure in the Union Budget FY2020-21 and FY 2021-22 the cost disability gap has widened. Increasing tariffs on inputs will cause a serious impact on the cost structures of PLI-approved companies and make their products uncompetitive for global markets.

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Both Samsung and Apple dominate the mobile phone exports from India and their contract manufacturers are the biggest investors under the PLI scheme.

Mohindroo said that the 15% duty on the camera lens and 2.5% on the rest of the components, make the production of camera modules in India highly competitive.

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The industry body has called for rationalization of taxes on the camera modules, motherboards (printed circuit board assembly), mechanics components, Lithium-ion cells for power banks, raw materials for wireless and audio devices, etc.

ICEA said that the increase in GST from 12% to 18% in March 2020 should be taken back as it slows down the digital India campaign and deters the growth of manufacturers. Before the introduction of GST, the excise duty plus VAT was 6% (in most states), and the weighted average was 7.2%. There was zero duty on all parts and accessories for production.

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Apple, Foxconn, Wistron, Lava, and Vivo all are members of ICEA. According to ICEA, mobile phone production in the country reached Rs 2.2 lakh crore in 2020-21 and is likely to cross Rs 2.75 lakh crore by March 2022 which will significantly meet the demand of the domestic market.

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Reduction of GST from 18% to 12% will help to achieve the target of putting smartphones in the hands of every Indian and to develop a domestic market of Rs 4 lakh crore.

Currently, the share of domestic companies in mobile production has dropped to 8% from 47% in 2016.

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The industry body has recommended the government to provide support of Rs 1,000 crore to Indian Companies and an interesting aid of 5% for loans up to Rs 1,000 crore. It also demanded a credit guarantee for up to Rs 500 crore for fixed and working capital requirements and an enhanced credit guarantee of Rs 1,000 crore for Indian companies falling under the PLI scheme.