Foxconn Country Head and MD Josh Foulger paid a courtesy visit to Commerce Minister Nirmala Sitaraman on March 21, 2017. Among other things, the two leaders discussed export incentives for mobile phones.
The manufacturing contractor for some of the biggest global brands like Apple expressed concerns over increased costs due to 2% import duty imposed on printed circuit boards. As a result, the domestic industry has suffered from uncompetitive prices in the manufacturing of feature phones and related accessories Foulger said.
The industry had demanded a slew of measures for export incentivisation earlier in anticipation of the budget. The increase of credit under Merchandise Exports from India Scheme (MEIS) from the current 2% rate to 5% was one of the most voiced out wishes. Under MEIS, exporters are credited in the form of duty credit scrips, on the basis of their total value of Freight on Board (FOB). These credits can be used to offset other specific export-related expenses like basic customs duty.
Among other demands were a ten year tax holiday for newly setup manufacturers, relaxation of import duty on capital goods used in the manufacture of handsets and a 12.5% duty on import of mics, USB cables and few other accessories which can be manufactured locally.
The Indian Cellular Association (ICA) forecasts that mobile handset import value will drop by 30% in 2016-17 to Rs. 40,000 crore. By 2019-20, the government plans to manufacture 500 million handsets and targets an export number of 120 million.
India, being the second most populous country is too big a market for handset makers to overlook. Over the years, many smartphone makers including Samsung and recently, Apple have opened production facilities in India to override duties and offer competitively priced phones to the Indian consumer. If phone manufacturing, as a sector, receives the much-required push from the Centre, India could dare to dream of achieving a net export position.
According to the Indian Cellular Association, the target for 2017-18 at 290 million may not be reached in the absence of a rigorous push for exports by the government.