NEW DELHI: The commerce ministry is reviewing the phased manufacturing programme (PMP) after the industry flagged that it would not help India become an export hub for handsets.
The handset industry, which had in 2015, backed the implementation of PMP with its graded import duties on devices and components, now seeks to shelve it till 2023 as the plan had been a partial success and more incentives were needed for exports.
“It is clear that even though PMP has helped in the development of the ecosystem, it has reached its limits, beyond which its effectiveness is questionable,” the Indian Cellular and Electronics Association said in a recent communication to Niti Aayog chairman Amitabh Kant, who also heads the committee on mobile phone manufacturing.
“We have apprised the minister for commerce and he has set up a vigorous review process for the same,” it said.
“For the time being, the mobile phone PMP be put in abeyance beyond 2018 levels till at least 2023. Conduct a thorough review of the levels of indigenisation, number of companies and investments before any decision is made on continuing PMP, but not before 2023,” it suggested. The association pointed out that PMP has led to filing of a case against India in the World Trade Organization.
Japan has recently filed a complaint in the WTO against India for slapping duties in “excess of bound rates”.
India levies 20% duty on fully made mobile phone imports to push companies to make in India. Components are charged at a lower rate.
More than 268 units have been set up in India since 2015, when PMP was implemented, churning out over 225 million mobile handsets every year and creating around 0.67 million jobs. Some of the biggest names in global contract manufacturing such as iPhone makers Foxconn and Wistron have set up shop in India.
While the levies helped create a local ecosystem for batteries, chargers and printed circuit board assembly, duties on components did not yield the same effect.
“The glaring misses are mechanics, camera modules, connectors and speakers. It is also futile to have a basic custom duty-led regime when zero-duty imports on the same products are permissible through all of Asean, primarily Vietnam, Korea and Japan,” said the letter from the industry, flagging another issue of imports through free-trade agreements with these countries.
“Moreover, PMP certainly dents India’s competitiveness which is the main ingredient and a precondition to building an export portfolio,” it said, underlining the government’s larger target of becoming an export hub for several industries, including electronics.
Source: economictimes.indiatimes.com