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Excise duty cuts on mobiles no major impact on mfg

Posted: 18 Feb 2014     Print Version  Bookmark and Share

Keywords:manufacturing  excise duty  handsets  interim budget  Nokia 

Finance minister P Chidambaram's proposal to promote domestically made mobile phones has received a mixed response from handset companies. Majority of the handsets including those of domestic firms such as Micromax, Karbonn, are mostly imported. Currently, about 80 per cent of the total handsets sold in India are shipped from abroad.

Handset manufacturers speak up

Commenting on the interim budget, Nokia India managing director P Balaji said the proposed incentives for the mobile phone industry are some steps to encourage domestic production of mobile handsets in the country.

"However, the beneficial CVD (special countervailing duty) rate of 1 per cent as proposed in the budget speech, does not extend to mobile phone manufacturing operations set-up within SEZs and EOUs, as the clearances by these units to the domestic tariff area are treated at par with physical imports into India," he told PTI.

"This will therefore exclude larger manufacturers like Nokia, which account for a major part of domestic production, from availing the benefit," he added. Nokia has its largest mobile manufacturing plant in Chennai.

India BlackBerry MD Sunil Lalvani issued a statement saying, "As always, the interim budget focus has been to sustain growth and bring about stability of the economy by way of addressing fiscal deficit and inflation."

"In a growing mobile market like India, where the telecom sector contributes nearly 3 per cent to the GDP, any positive amendment to the tax structure to reduce costs can consequently spur growth and bridge the growing urban-rural divide. Overall, I think the finance minister has aimed something of a balancing act to manage this year's fiscal budget. The need to foster growth has been the top priority."

"In the context of the recent Union Budget revelations, the revision of excise duties on mobile handsets is a visionary step towards ramping up domestic manufacturing. Looking at the present scenario, the rise in excise duty, for the sub-2k category, to 6 per cent with CENVAT credit, from 1 per cent the year before could lead to an increase in the overall cost of mobile phones priced below Rs.2000 as mobile handsets are largely imported," said Sanjay Kumar Kalirona, business head-mobiles, Intex.

Domestic mobile firm Maxx Mobile's Chairman and Managing Director Ajjay Agarwal said, "As it appears, current budget announcement of uniform excise duty for all handsets will have no impact on boosting domestic manufacturing." "Already under the custom notification on 12/2012 (Sr. 431) import of raw materials for mobile phones and accessories manufacturers does not attract any duty."

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