Union Budget 2020 Perceptions: What Seeks the Smartphone, Telecommunications industry From Finance Minister
The Union Budget 2020 is scheduled to be announced on 1st February, that is, tomorrow, and Finance Minister Nirmala Sitharaman is expected to make several announcements to help resolve the current slowdown and stimulate consumption and growth. There are great expectations of several policy changes, and the government is extremely expected to implement measures to help improve manufacturing, especially for the smartphone industry. To note, the customs duty on cellular handsets was raised to a few percents last year to deter imports and force local production.
The Government is expected to take a step forward this year to help make India a centre for manufacturing and exporting electronics. Manufacturers of mobile phones and accessories seek export rewards, and lower mobile device GSTs. Around the same time, analysts expect import duties to increase even further on those products. According to the Director Brand Strategy of Vivo India, Nipun Marya says, “The Government is committed to making India a centre of manufacturing and exporting electronics. We are therefore also hoping the budget will be a radical nudge in that direction.”
Within next 4–5 years India has the potential to be a major manufacturing hub. This is driven by increases over shipments of smartphones and other vertical products such as television, PCs and other market segments. Tariff barriers, of course, play an important role in pushing local sourcing around the globe with some of the countries that prefer the strategy, including India, but I believe it’s time to go beyond that and hence we believe that special incentive schemes and incentives for mobile phones as well as product manufacturing should be outlined in the budget in order to focus more on adding value. When said that, we still believe the government will raise import duties on certain components, while at the same time developing assertive export policies to boost them.
When India can encourage and concentrate on anchor firms to drive additional local value that will have more effect and bring other smaller businesses into the market to start their base in India. Through the Modified Special Incentive Package Scheme (MSIPS), the much talked about ’20–odd part generating ecosystem’ can be advertised in the budget.
The opportunity for smartphone players under M–SIPS should be raised to 30% of capital expenses to help offset the loss of business faced by companies when moving a product production facility to India. Should a corporation wish to move its manufacturing unit to India, the expense would result in revenue loss of about a few quarters of time. The rise in bonuses will help offset this revenue loss, and will enable players to make the move from China and Vietnam. The report also offers recommendations on the growth of transport and logistics networks, promotes labour reforms and delivers centred skills training.
Indeed the Indian Export Organizations Federation claims that many major guys are looking to move outside of China, and India could be a persuasive option, but it could be a major obstacle to its lack of investment ease. Government may appoint nodal officer from those in the statutory agencies for each investor investing beyond a threshold limit whose job should be to provide the investor with all clearances / approval. In fact, the additional investment takes place in the State that has to be taken on board to promote such investment as administrative procedures are still slow in the Member States.
India has huge potential for becoming the centre of mobile technology. He claims the government could provide the strategic impetus needed for the growth of the mobile phone industry in India. The upcoming Union Budget should focus on strengthening and speeding up the manufacturing of smartphone components, as well as enhancing added value in India. India's smartphone industry was a resounding success story of Make in India.
Our underlying assumption from the EU Budget 2020 is to see policies driving consumption and enhancing consumer demand. The proposal to exclude basic custom duty on open cells from 5 to 0 percent was a positive change last year and allowed us to pass on the savings to customers through reduced TV rates. These very efforts are helpful with implemented fabrication programs. However, over the past two years, the consumer appliances industry has witnessed a flat growth, and we urge the government to stay on the path of positive measures to promote and drive industry growth.
The distress fighting telecommunications operators are also seeking a subsidy or a simple loan scheme to do business. Contractors are looking to do business in India with ease. In the form of some subsidy or updated version of the time period, we can expect a relaxation on the operator dues to pay the duties or say an easy loan scheme.