The electronics industry wants the government to rationalize tariffs and disengage the smaller “nuisance tax” of about 2.75% on parts and components of mobile phones, sub-assemblies, and mechanics, as well as expecting to reduce Goods and Service Tax (GST) from 18% to 12%. 

Electronics industry for rationalization tariffs in Union Budget 2023

In addition to the above, the electronic industry also expects the basic customs duty on high-end phones levy at 20% to be capped at Rs 4,000 per device, in a bid to check the smuggling of high-end phones and add Rs 1,000 crores to the GST collection of States. 

Closeup shot of male hands testing electric current voltage in the circuit board of disassembled laptop using a multimeter tool on the table in the maintenance shop

The consumer durables and electronics industries are the greatest players in contributing to the Indian economy and are now expecting the Union Budget FY2024 will announce reforms that will escalate consumption and improve consumer demand for the company. 

Image Source: The Economic Times

Concerning a letter to the government, India Cellular and Electronics Association (ICEA) representing major electronics manufacturing companies requested a review of the existing tariff structure for electronics manufacturing thereof recommending a comprehensive analysis to appraise and evaluate the existing tariff on products of the electronic goods and the same revised tariffs plans will be announced in the upcoming Union Budget 2023-24.

In a bid to enhance the localization of manufacturing, the ICEA requested to reduce the smaller nuisance tariffs of 2.75% on input components. 

Closeup of electronic circuit board with CPU microchip electronic components background

With the above details, the ICEA mentioned tariffs are a major hindrance to improving India’s competitiveness in the manufacturing of global supplies. In contrast, India lags behind Vietnam, Thailand, and Mexico, among others. Additionally, highlights the need for a particular tax regulation on the parts of PCBA, connectors, and camera modules. 

“The stability of tariffs for inputs is imperative for the industry as it determines how much capital amount to be allocated for future extension plans, and alongside the constant tariff fluctuations has driven the manufacturers to operate in a viable manner. The exemption notification itself should comprise a termination period of at least five years”, ICEA said. 

The electronics industry further urged that the products which are not made in India should be exempted from all duties. In addition, the assembly requested to execute zero duty on open cell assemblies for manufacturing color TVs from a 5% duty imposed in 2020.

In the report, the ICEA mentioned that as the government lost nearly Rs 5000 crore due to gray market imports in 2022, pressed the importance of taking immediate action on reducing the GST rates for smartphones, color TVs, and air conditioners. 

“As the government has been in a crucial position to reconstruct the status quo and targeted to achieve global smartphones in the hands of every Indian, and to widen a domestic mobile phone market of $55 billion, there should be intense actions to be executed shortly and therefore GST on mobile phones to be reduced from 18% to 12%”, the ICEA mentioned.   

The consumer durables and electronics industry await the declaration of a well-balanced combination of reforms and regulations to be announced in the upcoming Budget 2023-24.

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