Vote on Account 2014: Mobile phones manufactured in India could see price ...
NEW DELHI: Mobile phones manufactured in India could see price moderation with Finance Minister P Chidambaram announcing a proposal to boost domestic manufacturing. However, a majority of mobile phones sold in India, even by domestic firms like Micromax, Lava and Karbonn, are imported.
However, Samsung and Nokia have manufacturing facilities in the country and the excise duty rejig may lower their cost of production.
'To encourage domestic production of mobile phones, which has declined, and reduce the dependence on imports, which have increased, I propose to restructure the excise duties for all categories of mobile phones. The rates will be 6 per cent with CENVAT credit or one per cent without CENVAT credit,' he said.
The Indian mobile handset market is one of the largest and amongst the fastest growing in the world with about 250 million handsets being sold annually. Despite this huge opportunity, domestic manufacturing of handsets has not had any reason to cheer, with about 80% of the handsets sold in the country being imported.
Last year, the government had raised the excise duty to 6 per cent on handsets priced above Rs. 2,000. The move was largely hailed as ineffective in bridging the gap considering about 70% of handsets sold in India are less Rs. 2000.
The industry however believes that the move is unlikely to benefit the domestic handset manufacturers as 1 per cent credit without CENVAT is too less. Also, since this budget has a durability of only 4 months, any long-term impact is unlikely. But the industry hailed this as a step in the right direction.
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