Industry body ICEA on Wednesday said removal of duty on imports of camera lens and some other inputs as proposed in the Budget are steps in the right direction but will have no significant impact on the final price of phones.

The cost impact on mobile phone’s Bill of Material (BoM) will be 0.16 per cent to 0.19 per cent, the India Cellular and Electronics Association (ICEA) said.

The industry body rued that the sector’s “genuine requests” pertaining to capping of basic customs duty (BCD) on import of high-end mobile phones or even its demand for removal of input duties on resin, mesh, sponge, film, gasket, logo and cover tape had not been addressed.

ICEA represents leading mobile phone makers and electronics industry players.

The association lauded the Budget proposal for removal of customs duty on camera lens, currently pegged at 2.5 per cent, as well as removal of duty on inputs for parts of connectors — Palladium Tetra Amine Sulphate.

Other steps like reduction of BCD on parts of open cell of TV panel from 5.5 per cent to 2.75 per cent (including social welfare surcharge) and continuation of custom exemption notifications which were facing a sunset on March 31, 2023 for another year too were appreciated by the industry body.

“These steps will have no significant impact on the final product price but are generally in the right direction. The cost impact on mobile phone’s Bill of Material (BoM) will be 0.16 per cent to 0.19 per cent,” ICEA said in a statement.

Pankaj Mohindroo, Chairman of ICEA, expressed disappointment that a high performing sector’s genuine requests have not been addressed.

“These could have provided a significant impact on competitiveness leading to better exports, arresting the grey market and boosting revenue,” Mohindroo said.

ICEA claimed “significant gaps” were left and added that any move for capping of BCD on import of high-end mobile phones to arrest the burgeoning smuggled market could have boosted government revenue, reduced smuggling, ensured fair trade and helped build legal businesses in India.

According to ICEA, other Budget misses included the demand for removal of input duties on Resin, Mesh, Sponge, Film, Gasket, Logo, Cover Tape, Adhesive Tape ranging from 8.25 per cent to 16.5 per cent.

“This was essential to promote the manufacturing of a very critical vertical — Mechanics,” Mohindroo said.

Other “gaps” were to do with its demand for removal of input duties of 2.75 per cent imposed in the previous Budget on the many inputs of PCBA, as well as removal of duty on certain parts of the chargers.

“While we have built a huge charger manufacturing industry, these changes would have helped us to become more competitive,” ICEA argued.

Mohindro said that while industry had met the 2021-22 manufacturing target of Rs 2,75,000 crore, it will fall short of the manufacturing target of FY2022-23 on account of shrinking domestic demand.

“The 50 per cent increase in GST from 12 per cent to 18 per cent has dealt a very cruel hand to this high performing industry which kept the nation’s economy moving during the Covid pandemic. Competitiveness is the key for both buoyant domestic demand and export,” ICEA top official said.

In her Budget speech, Finance Minister Nirmala Sitharaman said that as a result of various initiatives of the government, including the Phased Manufacturing programme, mobile phone production in India increased from 5.8 crore units valued at about Rs 18,900 crore in 2014-15 to 31 crore units valued at over Rs 2,75,000 crore in the last financial year.

“To further deepen domestic value addition in the manufacture of mobile phones, I propose to provide relief in customs duty on import of certain parts and inputs like camera lens and continue the concessional duty on lithium-ion cells for batteries for another year,” Sitharaman said.

Over the past few years, India has taken decisive steps to encourage sustainable manufacturing and export of electronics.

The pandemic woes, supply chain disruptions, rising labour costs and growing strategic concerns and geopolitical flareups compelled many global electronics players to look at China plus one strategy of diversifying manufacturing and production to alternate locations, putting India at a strong vantage position. PTI MBI MBI ABM ABM