It also wants that the 20% basic customs duty on high-end phones be capped to Rs 4,000 per device, in a bid to check smuggling of high-end phones, and add to the GST collection by Rs 1,000 crores.
In a letter to the government, the India Cellular and Electronics Association, representing major electronics manufacturing companies, has asked for a review of the existing tariff structure for electronics manufacturing, recommending a comprehensive study to assess and evaluate the existing tariff on products, as part of its recommendations for the upcoming union budget 2023-24.
ET has reviewed a copy of the letter.
“Tariffs are becoming a major challenge in improving India’s competitiveness in manufacturing for global supplies where we are lagging behind Vietnam, Thailand, and Mexico, among others,” ICEA said in its budget recommendations.
“We emphasize that in the case of small tariffs, the traditional understanding of tariffs as protecting the domestic industry fails. We request particular attention to parts of PCBA, connectors, and particularly camera modules,” it added.
In a bid to increase localization of manufacturing, the association has asked for a reduction of smaller, “nuisance” tariffs of 2.75% on input components. “The stability of tariffs for inputs is paramount for the industry; however, the constant tinkering in tariffs for inputs has made it very difficult for manufacturers in India to operate in a viable manner. The exemption notification itself should have a sunset of at least five years,” ICEA said.
The electronics industry further demanded that products which are not made in India should be exempted from all duties. In addition, it asked for zero duty on open cell assemblies for manufacturing color TVs from a 5% duty imposed in 2020.
The association has also asked for a ceiling on imposing 20% basic customs duty on high-end mobile phones, which it asked to be pegged at Rs 4,000 per device. This, it argued, will curb smuggling of high-end devices and add Rs 1,000 crore to the government’s GST collection.
ET reported that the government has lost Rs 5000 crore in 2022 due to the gray market import of over 1.2 million units worth Rs 10,800 crore.
Further, ICEA asked for a reduction in GST rates for smartphones, color TVs and air-conditioners.
“To achieve the goal of smartphones in the hands of every Indian, and to broaden a domestic mobile phone market of $55 billion it is imperative to restore the status quo ante with respect to the GST on mobile phones from 18% to 12%,” the association said.
Aside from the demands to rationalize taxes and duties on finished goods, industry stakeholders have asked duty exemptions on capital goods to cover even the parts and components manufacturing.
Further, ICEA has urged that the royalty on import of know-how be taxed only once as per the contract between the supplier and user of the know-how, which requires coordination between customs, GST and income tax authorities.
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