This competitive disadvantage has led to scaling back production, further leading to a loss of between Rs 10,000 crore and Rs 15,000 crore
With an aim to boost the manufacturing of handset components in the country, the India Cellular & Electronics Association (ICEA) has requested the government to provide rollback of import duties on inputs for chargers, power banks, camera modules and printed circuit board assembly (PCBA) in the upcoming budget. The duties were hiked in the 2021-22 budget.
Pankaj Mohindroo, chairman of ICEA, said in a letter to Union Minister of State for IT, Rajiv Chandrasekhar, that raising tariffs on components makes import of the whole part cheaper than manufacturing them in the country.
This competitive disadvantage has led to scaling back production, further leading to a loss of between Rs 10,000 crore and Rs 15,000 crore.
ICEA has complained that these tariffs “were imposed suo motu by the Department of Revenue.”
The industry has argued that incentives under the government’s flagship Production-linked Incentive (PLI) scheme conflict with the increase in custom tariffs on inputs.
“The PLI scheme is aimed at decreasing the existing cost disability in India versus China and Vietnam,” the industry body said, adding that any increase in customs duties on inputs will increase this cost disability.
Therefore, it is contrary to the core policy objectives of the PLI scheme as this leads to increase in imports rather than import substitution, it said.
In the case of chargers, ICEA said, with the right policies, India was able to establish a charger industry with more than 60 manufacturing units producing over 600 million chargers, which were being exported as well. However, with duties, the charger industry has gone into de-growth.
It said the additional duty impact after the 2021-22 budget has been 6-7 percent on the bill of materials of chargers.
The industry body has also sought replacement of the 20 percent basic customs duty currently prevalent on all handsets above Rs 20,000.
“The grey market in high-end phones is greater than 50 percent. Price arbitrage is 43.96 percent in high-end phones (out of which 22 percent is the BCD and 18 percent is the GST),” ICEA said.
