“Certain exemptions were given under customs notification since 2017 covering various items. But on February 1, some exemptions were withdrawn for customs duty on various components. Due to this, it is estimated that the cost of Make-in-India products will go up 5-6 per cent because many of the components are imported, they are not made here,” BIF President TV Ramachandran told PTI. In a recent letter to the Finance Secretary, the BIF has voiced concern that duty increase in components, due to the notification, has resulted in significant increase in the cost of production.
“This is likely to completely offset the possible benefits that could accrue from the excellent PLI (production-linked incentive) scheme announced by the Department of Telecom (DoT) on February 24, 2021, thereby rendering it ineffective,” BIF has told the government. The industry has made two sets on submissions on the issue to the government – on March 22 and previously on March 1.
Drawing attention to the import duty issue, BIF contended, “This would seriously impact the government push for Make-in-India under the Aatmanirbhar Bharat mission and also make telecom products made in India uncompetitive as compared to equivalent products imported from FTA countries”. Highlighting that significant investments into the sector are hinging upon the takeoff of the PLI policy, BIF urged the government to address the issue.
Earlier in its letter dated March 1, BIF had called attention to the Budget-related notification, and rued that the telecom industry will be liable to pay basic customs duty (BCD) and Social Welfare Surcharge (SWS) on inputs or raw materials for manufacturing of telecommunication equipment falling in the said list. “Customs duty payable post the removal of this exemption, would lead to many components suffering an additional duty ranging between 8.25 per cent to 16.5 per cent making cost of Make-in-India telecom products to go up…,” BIF had said then.
This duty increase coming on top of the removal of export incentive (MEIS) is impacting the cost competitiveness of Make in India products. Despite the government push for Make-in-India under the Aatmanirbhar Bharat mission, telecom products made in India will, as a result of the recent move, become costlier than the finished products imported from FTA countries, the BIF claimed. It added that import of Printed Circuit Board Assembly (PCBA) for telecom manufacturing is also now “suffering” a duty of 11 per cent. PCBA is used across telecom products such as phone, base stations, controllers and others products.
“While the intent of the Government is to promote as much local manufacturing of these unpopulated PCB, we see that at this point of time, the kind of unpopulated PCBs that we require for the telecom products is not available in India,” it submitted. The industry body requested Government to continue with the duty exemption available for the PCBAs so that supply chain resiliency is enabled.
“This may be withdrawn once the Indian manufacturers develop the required capability and sufficient capacity of unpopulated PCBs,” the BIF said. The BIF has requested the government to look into the issues in a favourable manner, such that manufacturers making in India for domestic consumption as well as for exports are provided a taxation regime “which is both stable, rational and provides avenues to Make-in-India products to become competitive-both for local markets as well as in the global markets”.
“The high duties on components and other inputs will significantly impact this objective. We urgently beseech you to withdraw the said duties and request for continuance of the duty exemption on the telecom components as mentioned,” it said.