Duty on PCBs 2% in­crease will have no im­pact on end con­sumers

Voice&Data - - COVER STORY - —Naren­dra Bansal,

“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

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