'Increase in tax on mobile parts make PLI uncompetitive for exports'

New Delhi: Demanding reduction in import duty on parts used for making mobile phones, industry body ICEA has said that increase in taxes on components will make the products manufactured in India under the PLI scheme globally uncompetitive.

The India Cellular and Electronics Association (ICEA) in its budget wishlist has demanded roll-back of goods and services tax to 12 per cent from 18 per cent at present as it is 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 chairman Pankaj Mohindroo in a 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 manufacturing in India compared with other countries such as China and Vietnam that existed before January, 2020.

"Post the change in the duty structure in the Union Budgets for financial year (FY) 2020-21 and FY 2021-22 the cost disability gap has increased further. Increasing tariffs on inputs will lead to serious impact on the cost structures of PLI approved companies, rendering their product uncompetitively priced for global markets," Mohindroo said.

Samsung and Apple's contract manufacturers are the biggest investors under the PLI scheme and both these brands dominate mobile phone exports from India.

The government expects mobile phones worth Rs 10.5 lakh crore to be manufactured under the PLI scheme.

Mohindroo said that the government has introduced 15 per cent duty on camera lens and 2.5 per cent on rest of the parts which make the camera modules production in India competitive and called for rationalisation of taxes as complete camera modules used in mobile phones can be imported by paying 11 per cent import duty.

The industry body 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. ICEA said that the hike in GST by 50 per cent in March 2020 to 18 per cent from 12 per cent should be rolled back as it slows down the digital India campaign and deters growth of manufacturers.