Mr Pankaj Mohindroo, Chairman, India Cellular & Electronics Association (ICEA) welcomed the Union Budget presented to the Parliament today. He specially noted the emphasis on the digital economy and the vision of creating one lakh digital villages, up from the current number of 22,000 which is a bold and visionary step, he commented. Further, he thanked the Government for specially recognizing metamorphic steep growth of the industry to 268 factories in a short span of 3 years. It is pertinent to note that this is the only industry mentioned. The growth has been wide and deep in the mobile phones besides its parts and components. The Minister mentioned that the mobile communication rates in India are the lowest in the world. This has been fueled by the rise of the mobile phones in the communication space. Mr Mohindroo said that the huge growth has cropped up many other issues which need to be resolved at the earliest so that the growth rate is kept up. One thing the market growth is not as healthy as desired with the share of the local brands falling at an alarming rate. Further, the growth of the parts and components industry requires a lot of rationalization with inverted duty feasible, especially in the GST sphere. Mr Mohindroo has requested the Government not to wait for the results of the elections since these are measures which are doable in the short-term. Further, the need for reform in custom duties and GST, especially with regard to classification matters.
ICEA further requested for urgent action on the following:
(a) To contain the alarming increase in the gray market in the high-end phones which is distorting trade dynamics.
(b) A special package for making India a global hub for mobile phones by bringing in direct tax exemption and appropriate export incentives.
Mr Mohindroo noted with satisfaction ’internal trade’ has been included along with industry promotion in the renamed DIPP. This will give focused attention to Supply Chain Management which is the key in the spread-out mobile phone industry. It has a long supply chain starting from raw material to component and finished goods. The next stage in the distribution chain of finished phones extends to every nook and corner of the vast Indian landscape. ICEA Chairman
suggested that the GST rates be reformed in the supply chain and requested the Government to have a single tax of 12% in the long supply chain to facilitate manufacturing and avoid inverted GST. This link in the chain is very much visible today with taxes ranging from 12%-18%-28% which creates imbalance and discontinuity