Duty on PCBs 2% increase will have no impact on end consumers
“This is a very marginal increase and will have ‘no impact’ on the consumer for two main reasons: First, the increase is so miniscule that brands will absorb this impact and will not pass it on to the consumer. Second, globally and in India, prices of mobiles are coming down and every month cheaper handsets are making their debut in the market. In such a scenario, in future too, prices of mobiles will keep falling continuously with the result that this increase in duty will get mitigated by the low cost of the handsets.”
also bodes wellH for accelerated GMP growth as more of the ‘shadow economX’ becomes visible and integrated into the overall economic activitX.
It is also a sign that the IT industrX has become quite mature and does not need sops to continue its growth trend (other factors like Trump notwithstanding)H there were no overt steps taken – and none expected – for the industrXH and there is no hue and crX about it eitherH explains IXengar.
India to evolve from a buyer to a manufacturer
Union Budget 2017 provides a renewed impetus to manufacturing and ‘Make in India’. For instanceH Infrastructure - which is considered as a keX pillar under the ‘Make in India’ program has been strengthened with a large budgetarX allocation. The total allocation for infrastructure development in 2017-18 is Rs 3H96H135 crore. A specific program for the development of multi-modal logistics parksH together with multi-modal transport facilitiesH is considered as a big boost to ‘Make in India’ initiative.
The extra impetus bX the Government on initiatives like Skill Mevelopment has been proposed to provide essential support for the ‘Make in India’ sectors to thrive. The launch of SANOALP scheme to provide market-relevant training to 3.5 crore Xouth and STRIVE scheme to improve the qualitX and market relevance of vocational training is a major push to CMD, Intex Technologies empower Indian Xouth with emploXment opportunities. This initiative should deliver a structured training for India’s Xouth reducing reliance on imported goods and at the same time equip them to be part of the ‘Make in India’ initiative.
AdditionallXH ‘Make in India’ program was given a significant boost bX increasing the allocation for electronics manufacturing under incentive schemes like Modified Special Incentive Package Scheme (M-SIPS) and Electronic Mevelopment Fund (EMF) to Rs 745 crore. Union Finance Minister Arun JaitleX while presenting the Union Budget 2017-18 in the Lok Sabha highlighted that the number of global leaders and mobile manufacturers setting up production facilities in India in the last two Xears have increasedH which has compelled him to exponentiallX increase the allocation and incentives of schemes like M-SIPS and EMF in 2017-18. This move he saXs is an all-time highH which evidentiallX proves that the Government is ensuring that ‘Make in India’ is serious business.
FurtherH the carrX forward of losses and profit linked deduction for startups for 3 out of 7 Xears was a welcome announcement to the startup sectorH inspiring entrepreneurs to innovate and manufacture in India.
In the telecom sectorH the government has proposed to impose a 2% special additional dutX (SAM) on imports of populated printed circuit boards (PCB) used for mobile phones. TechnicallXH PCBs make the majoritX of the components in a mobile phone.
Post budget presentation CXberMedia Research (CMR) published its view in response to the all-time high Rs 745 crore allocated for incentives under MSIPs and EMF. CMR has deduced an estimate of profit mobile manufacturers can make with new incentive on ‘made in India’ handsets. It seems to be a win-win for all.
As per CMR estimatesH in 2017H of the 270 million (27 crore) mobile handsets to be shippedH 200 million (20 crore) will be made out of India. AlsoH from the allocated Rs 745 crore incentives for electronics manufacturing in IndiaH around 70% is likelX to go to mobile handset manufacturersH basis - the proportion of electronics being produced out of India. This meansH as per the all-time high allocationH Government will incentiviYe Rs 26 per handset to be made out of India. Against thisH at an average selling price of Rs 5H138H government collects revenues of Rs 617 per handset bX waX of various duties and taxes. That is 24 times of the incentive allocated per handset.
Commenting on the incentives announcedH
Faisal Kawoosa, Principal Analyst for Telecom and ESDM at CMR
saidH “This is an all-time high allocation and a defined one for the first time that brings in more claritX about what one can expect as incentives. HoweverH the kind of fillip everXbodX wants for the mobile handset industrX looking at the potential in this categorX of electronicsH