Make in India: Challenges & Prospects

Niti Aayog for abolishing 2% duty on mobile phone circuits

  • Mobile phones could become cheaper if the government accepts a Niti Aayog proposal to drop the 2% import
    duty imposed on a critical component for handsets in the Union Budget for 2017-18.
  • The Budget had imposed a 2% special additional duty on imports of populated printed circuit boards (PCBs) used for mobile phones, as a measure to push the Make in India campaign.
  • The Aayog, in its draft three year action plan, has said the duty will hurt mobile phone makers in the country and the government must ensure that industries are not built behind ‘a wall of protection.’
  • Calling for a ‘low or no duty regime’ for key inputs of electronic products, the Aayog has said that the 2%
    customs duty on PCBs would provide modest protection to domestic manufacturers, but hurt the mobile phone
  • Though India has the potential to become a large electronics manufacturer and exporter due to its large
    labour force, a growing domestic market and proximity to other economies on the electronics value chain, the
    sector accounted for just 3% of India’s merchandise exports in 2015.
  • To increase India’s electronic manufacturing volumes and create jobs in the sector, we must address the high
    costs of inputs, reduce the administrative burden and provide appropriate incentives to producers.
  • The world market in electronics products is $2 trillion compared with only $65 billion in the domestic market.
    Therefore, an aggressive export strategy is essential to credibly prepare ourselves for the fourth Industrial

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