Ahead of the Union Budget 2022-23, the India Cellular and Electronics Association (ICEA) on Monday urged the government to rationalise tariffs on inputs for parts and components of mobile phones and revisit basic customs duty on high-end mobile phones.
In a letter to Union Minister of State for IT Rajeev Chandrasekhar, the ICEA said that in order to ensure that the maximum manufacturing can happen in India, duties on the inputs of the parts and components of mobile phones must be carefully calibrated, and rationalised.
"With the 2021-22 Budget, there were duty rate increases on the inputs of mechanics, power banks, connectors, PCBA, camera modules, chargers, and true wireless stereo. These were not envisaged by us or MeitY, and were not even a part of the PMP architecture," said the industry's apex body in the letter.
After earlier policy interventions, the charger industry had got well established in India with more than 60 manufacturing units producing over 600 million chargers, with good exports as well, the ICEA said.
"However, with the duties, the charger industry has gone into de-growth. The additional duty impact post-2021 Budget has been 6-7 per cent on the Bill of Materials of chargers," read the letter.
ICEA Chairman Pankaj Mohindroo said that the transformer industry in particular is hit hard.
"Duty on inputs of the transformer were increased to almost the same level as the finished transformer. This duty can be accepted, and manufacturing in India developed, provided inputs are available at zero duty (as had been done till the 2021 Budget) to allow the industry to settle down," he said.
Further, the duty on inputs of mechanics have been increased, which makes it impossible for the local manufacturing of mechanics to compete.
"The higher duty is increasing the product cost, which, in turn, is impacting end consumers during this pandemic situation. Therefore, in addition to the reversal of duty, reduction of the value addition norms from 15 per cent to 5 per cent will assist the exporter to import under the Advance Authorisation Scheme," said Mohindroo.
The PCBA manufacturing has grown rapidly in India from Rs 5,000 crore in 2014-15 to Rs 90,000 crore in 2019-20.
"However, 2.5 per cent duty on some parts is unsettling. Components of PCB for mobile phones (FR4, copper, nickel, and gold) have seen steep increases in the imposed duty," said the letter.
"All duties on inputs to camera modules need to be withdrawn so that the industry is able to develop," it added.
In spite of being in PMP since 2018, imports constitute over 70 per cent of the requirement.
However, the imposition of 15 per cent duty on camera lenses and 2.5 per cent duty on rest of the parts make the production of camera modules in India uncompetitive, said Mohindroo.
"Camera lens constitutes 40 per cent of BoM and duty imposition is extremely detrimental. This is extremely high-tech and we do not foresee any development over a long period. We may emphasise that this imposition will have an effective increase of 7 per cent - 8 per cent on the cost of camera module manufacturing in India," said the ICEA letter.
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