Mobile industry body Indian Cellular Association (ICA), on February 10, 2017, stated that enthusiastic electronics companies assessing to invest in India for manufacturing are now perplexed over the government schemes and roadmap, those aimed to boost local production.
Showing concerns over the high-taxes in India, ICA National President Pankaj Mohindroo, stated that, “There can be no substantial investment in this environment where direct tax and dividend distribution tax is so high. Phase-wise manufacturing programme has not been carried forward.
He pointed out that when competitive rivals China and Vietnam are taxing in the range of 0-10 per cent, the direct and dividend tax in India adds up to around 45 per cent.“Numerous investors have expressed concern on this as well MSIPS (Modified Special Incentive Package Scheme)“.
Mohindroo said a number of investors have also expressed concern on governments move to cap subsidy outgo for electronics manufacturers under MSIPS to Rs 10,000 crore.
“Finance Minister has talked about investment of Rs 1.25 lakh crore in electronics manufacturing sector, which translates into an MSIPS outflow of Rs 31,250 crore. Investors are not clear on this since the maximum commitment amount under MSIPS has been notified as Rs 10,000 crore,” Mohindroo said.
In July 2012, the Cabinet had approved MSIPS to provide a special incentive package promoting large scale manufacturing in the electronic system design and manufacturing (ESDM) sector.
The scheme provides subsidy for capital expenditure — 20 per cent for investments in special economic zones (SEZs) and 25 per cent in non-SEZs.
Government in January capped outflow under MSIPS.
He said that 2017-18 is going to be the defining year for mobile industry where government support is required to achieve 500 million mobile phone productions in India by 2020 as identified by Fast Track Task Force (FTTF) set up under the Ministry of Electronics and IT.
“This year we have target to increase local production to reach 290 million handset from 175 million. It cannot happen unless robust exports start,” Mohindroo said.
He said that government has not given special incentives for boosting exports of mobile phones, which dominates electronic manufacturing segment.