Mobile phone manufactures have approached the finance ministry seeking continuation of the differential duty structure and the benefits that come with it, which they fear would become a casualty when the goods and services tax comes into effect.Absence of these incentives could put at risk a manufacturing industry that is worth Rs.54,000 crore now and is set to grow to Rs.94,000 crore by the end of this fiscal year.
“We look forward to your kind support in establishing the proposed dispensation in GST and clearing the air on the principle of duty differential in the upcoming GST regime,“ the Indian Cellular Association wrote in a letter to Revenue Secretary Hasmukh Adhia.
The association represents major handset makers including Samsung, Apple and Micromax. ET has seen a copy of its letter sent on Saturday.
Mobile phone manufacturers were among the first to respond to the Prime Minister's Make in India call, making in vestments in local assembly facilities. Value of local production soared nearly threefold to Rs. 54,000 crore in 2015-16 from Rs. 18,900 crore in 2014-15, after a 29% on-year drop the year before. The change happened after the government imposed higher duties on imports of fully made phones compared with those made locally .
But the GST regime, which will have two components of central and state GST, can possibly upset the Make in India programme by levelling out the duty advantages for making locally versus imports, handset makers say.
Sources said incorporating duty differential under GST would require cooperation of different ministries.
The Economic Times New Delhi,21th September 2016
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