‘Union Budget largely met the expectations of ESDM sector’

The Union Budget has largely met the expectations of the Electronics Systems Design and Manufacturing (ESDM) sector with number of changes in Indirect tax structure to strengthen manufacturing of IT hardware and mobile phones, says ELCINA

By Sai Nikesh D

Aimed at improving electronics and related manufacturing activity in the country, the Government in its Budget 2016-17 has eased Basic Customs Duty (BCD) on majority of hardware equipment through incentivization of domestic value addition under the ‘Make in India’ move.

These include equipment related to manufacture of a wide range of products related to electronics, electrical, among others.

The Government’s move to boost India’s electronic manufacturing capability got appreciation from the apex electronics industry body- Electronics Industries Association of India (ELCINA), which said the Budget has laid right emphasis on domestic manufacturing to facilitate the ‘Make in India’ initiative and hoped that it would provide the much-needed fillip to accelerate growth.

“The Union Budget has largely met the expectations of the Electronics Systems Design and Manufacturing (ESDM) sector with number of changes in Indirect tax structure to strengthen manufacturing of IT hardware and mobile phones. There is a clear indication that differential duty structure for mobiles and tablets (introduced last year) is being taken to the next level by including components and parts for chargers, batteries, wired head sets and speakers to nil duty on actual user condition,” Rajoo Goel, Secretary General of ELCINA, said.

A number of duties have been rationalised to promote manufacturing of a wide range of products such as routers, modems, set top boxes, DVR, NVR, CCTV cameras and others.

BCD on some of the components which were not covered under Information Technology Agreement(ITA-1) have also been re-introduced, he added.

He further noted that ‘introduction of Special Additional Duty (SAD) on populated Printed Circuit Boards (PCBs) for a variety of equipments is another key step’ and exuded confidence that this would increase Electronic Manufacturing Services (EMS) activity in the country and drive up the demand for components.

However, according to Rajoo, nil BCD, Countervailing Duty (CVD) and SAD on all components, parts and inputs would in a way create obstacles for the local component manufacturers.

One of the long standing demands of component manufacturers was to simplify the procedure of import of inputs at zero duty under Customs Notif. 25/99 (import of goods on Concessional Duty Rate for manufacture of excisable goods) a cumbersome process that has continued to baffle and confuse the industry.

However it is noteworthy that a notification superseding the erstwhile Rules of 1996 has been introduced and hopefully simplify the procedure considerably and encourage the component manufacturers, Rajoo added.

With careful implementation, ELCINA believes that this Budget would provide the right direction for the overall growth of the Indian economy and encourage investments in the ESDM Sector, he said.

This was published in The Dollar Business on March 01, 2016

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