Ministry of Commerce & Industry

Posted On: 11 FEB 2019 1:00PM by PIB Delhi

One hundred twenty-seven units are manufacturing mobile handsets in the country and all of them are operating from the Domestic Tariff Area (DTA).  As per information received from the Department of Commerce, M/s Flextronics Technologies (I) Pvt. Ltd. and M/s Pertech Exports Pvt. Ltd. have been granted letter of approval for manufacture of mobile handsets in SEZs.

As per information received from the Ministry of Electronics and Information Technology(MeitY), the mobile handset manufacturing operations in DTA are governed by the applicable duty structure. The benefits available to manufacturers of mobile handsets include rationalized tariff structure and a Phased Manufacturing Programme (PMP) and their sub-assemblies, parts, availing Capex benefits under the Modified Special Incentive Package Scheme (M-SIPS), 100% FDI  permitted for manufacture of mobile handsets and their sub-assemblies, parts, export incentive of 4% of FoB value of export under the Merchandise Export from India Scheme (MEIS) and specified capital goods for manufacture of mobile handsets are permitted for import at ‘Nil’ Basic Customs Duty (BCD).

Benefits available to the units under SEZ Act, 2005 & SEZ Rules, 2006 include duty free import and domestic procurement of goods for development, operation and maintenance of SEZ units, 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years, exemption from GST and supplies to SEZs are zero rated under IGST Act, 2017 and exemption from other levies as imposed by the respective State Governments.

MeitY has received representations from industry, industry associations, including M/s Samsung India Electronics Pvt Ltd in respect of Phased Manufacturing Programme (PMP) for 2019-20.  MeitY has informed that its proposal to defer PMP for cellular mobile handsets, its sub-assemblies and parts, sub-parts, inputs of the sub-assemblies thereof has been accepted by the Department of Revenue, Ministry of Finance.

Import of LCD, LED TVs from Free Trade Agreement (FTA) countries including China is 3.68 lakh units in 2017-18 and it is 7.58 lakh units during April to October, 2018. Although Samsung has stopped production of TVs in India and import from Vietnam has risen during 2017-18, Government has undertaken several initiatives to promote domestic electronics manufacturers. Ministry of Electronics & Information Technology has implemented incentives schemes, increased FDI up to 100% and introduced ‘Nil’ Basic Customs Duty for notified capital goods. Proactive steps are taken in R&D with grant-in-aid to premier technology institutes to support “Make in India”. National Centre for Excellence have been set up in areas of Flexible Electronics (NCFleXE), Technology for Internal Security (NCETIS), Next Generation AMOLED Displays, OLED Lighting and OPV Products and Internet of Things (IoT).

This information was given by the Minister of State of Commerce and Industry, C. R. Chaudhary, in written replies in the Lok Sabha today.

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MM/SB

Manufacturing incentives for mobile handsets retained while PMP deferment permits continued tariff, FDI and SEZ benefits. Manufacturing of mobile handsets is governed by a calibrated duty and incentive framework across DTA and SEZs: DTA benefits include a rationalized tariff structure, the Phased Manufacturing Programme, M SIPS capex support, permitted nil Basic Customs Duty on specified capital goods, MEIS export incentives and 100% FDI for handset manufacture; SEZ benefits include duty free imports and procurement, phased income tax exemptions under Section 10AA, GST exemption with zero rated supplies under IGST, and exemption from other state levies.