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Handset Makers Demand 10% Duty Differential in GST

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Say it's needed to keep Make in India for mobile phones attractive

Handset makers have demanded that the government keeps at least 10% duty differential in the goods and services tax regime to ensure that Make in India proposition for mobile phones remains attractive, emphasizing that sop for local manufacturing be continued for another decade.

Mobile phone makers have proposed nil or 1% Central GST and State GST at merit rate of 5% on all phones and tablets, whether imported or made locally , and on inputs, parts and components.

“The industry is extremely concerned how things will pan out in GST, particularly in connection with investments into manufacturing of mobile phones and components,“ Pankaj Mohindroo, chairman of the Fast Track Task Force (FTTF) said in a letter to electronics and information technology secretary Aruna Sundarajan Friday , highlighting apprehensions regarding further investments by companies, till duty differential principle was settled. “An early clarification and assurance on continuation of the custom and excise duty dispensation is critical to keep the manufacturing momentum going,“ the body said.

The task force was established by the government to achieve its target of 500 million locally made handsets by 2019, and establish a component industry with a turnover of Rs.50,000 crore.FTTF includes representatives from Samsung, Apple, LG, Panasonic and Micromax among others.

The government presently levies a 12.5% countervailing duty on fully made phones imported into India and a similar rate of duty on batteries, chargers and headsets of mobile phones.

But the new tax regime can possibly upset the task force's Phased Manufacturing Program if duty differential is not continued, handset makers say .

Also at stake in PMP's plan, as per which about 1.2 billion units of mobile phones worth Rs.15 lakh crore can be made in India by 2025-26, besides conservatively employing 5.8 million people.

The Economic Times, New Delhi, 20 August 2016

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