Customs waiver to boost local players, made in India products: Industry

The budget proposal to waive customs duties on capital goods used to make electronics items like mobiles and TV sets would increase the competitiveness of local producers and boost the make in India program, industry players said Friday. Finance Minister Nirmala Sitharaman in the Budget for 2019-20 also announced a hike in customs duties on imported products like an indoor and outdoor unit of split system air conditioner, CCTV, IPTV, optical fiber and digital video recorder, making them expensive by around 8 percent.

Industry players welcome the steps, stating that these would increase the competitiveness of local manufacturers. “This is a welcome step by the government that will surely boost the Make in India initiatives and make the local manufacturers more competitive in the market. Also, wherever possible, it will be passed on to consumers to make sure they too benefit out of it," Karbonn Mobiles-owner Jaina Group Managing Director Pardeep Jain.

The government waived import duty on capital goods for populated PCB assembly (motherboard), camera module and charger of mobile phones, lithium-ion cell, display module, set-top box, compact camera module, cathode ray tubes (picture tube), CD, DVD, color television, a plasma display, etc. "The removal of basic customs duty on capital goods for manufacturing of parts and components will reduce capital cost by 7 percent and improve competitiveness. Many such steps will lead towards making India the most competitive nation in the mobile phone manufacturing ecosystem and will eventually reduce the cost for consumers," ICEA Chairman Pankaj Mohindroo said.

The Consumer Electronics and Appliances Manufacturers Association said that imposition of customs duty on a number of emerging and high-growth product categories such as CCTV and IPTV cameras and digital video recorder and network video recorders which are largely imported will attract interest from domestic manufacturers as the import duty imposed (20 percent) gives them a level of protection. While, the prices of the split AC are expected to increase around 8 percent, as the government has proposed to double customs duty on the indoor and outdoor unit.

The government proposed to increase the customs duty to 20 percent on air conditioners from the present 10 percent. "While outdoor units have by and large been indigenized, indoor units are yet to achieve the same degree of localization, which will now be boosted," CEAMA president Kamal Nandi said.

The industry was already paying 20 percent duty earlier but some manufacturers were importing both the units separately and paying less duty. "This would bring clarity in the sector," he added.

The government revived its efforts to attract high-tech companies for setting up manufacturing units in India in areas like electronic chip manufacturing, laptop, etc with a promise of direct and indirect tax incentives. "Government will launch a scheme to invite global companies through transparent bidding to set up mega manufacturing plants in sunrise and advanced technology areas such as semiconductor fabrication," she said.

The finance minister said the scheme will include units in the fields of solar photovoltaic cells, lithium storage batteries, solar electric charging infrastructure, computers servers, laptop, etc. Electronic Industries Association of India Secretary General Rajoo Goel said that relief under Section 35AD of Income Tax Act to manufacturers is a positive step.

"However the electronics sector had requested that the entire sector be covered under 35AD which has not been done. FM must consider this request and at least provide this benefit to all ICT products and their inputs covered under ITA-1 and allowed for import at zero duty," Goel said Earlier also, the government had announced schemes for setting up semiconductor plants in the country. Proposals from a consortium led by Jaiprakash Associates Ltd and HSMC Technologies India were shortlisted entailing a cumulative investment of over Rs 63,000 crore.

Jaiprakash Associates withdrew its proposal, while in April 2018 the Ministry of Electronics and IT canceled the letter of intent issued to HSMC Technologies for setting up semiconductor plant. Goel said that the reduction of GST and import duty on inputs for electric vehicles is a positive step and will give a much-needed boost to this product which is the future of mobility.

Electric bus maker PMI Electro Mobility Solutions executive director Aman Garg said favorable policies and subsidy scheme will add to the enabling ecosystem of manufacturing electric vehicles and bringing technology to India. "PMI has already committed to invest Rs 500 crore in operating the new energy buses and looks forward to working with the government to make the vision for adaptation to EV a success," Garg said.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)