Budget 2024: How India Will Become a Hub for Mobile Manufacturing, ICEA Suggests Path

Pune, 4th July 2024: The India Cellular and Electronics Association (ICEA) has proposed significant reductions in duty rates to zero to attract global value chains (GVC) and boost large-scale production ahead of the Budget 2024. ICEA’s recommendations, which include removing the 2.5 percent duty on components and raw materials for product assembly, aim to develop a robust ecosystem for component manufacturing in India. This move is expected to help domestic manufacturers compete with global companies. Finance Minister Nirmala Sitharaman is set to present the first budget of Modi 3.0 in the third week of July.

ICEA’s suggestions are based on a study of duty rates in seven competitive economies, including India. The organization emphasized that high duties on raw materials hinder growth by increasing production costs and reducing export competitiveness. “If duties on raw materials remain high, it halts the engine of growth that drives production. This negatively affects exports as prices cannot remain competitive in the global market, leading to decreased production of the final product, i.e., mobile phones,” ICEA stated in its report.

The ICEA believes that reducing duties on raw materials is crucial for resolving these issues. “We believe developing a domestic supply chain is crucial, but the right way is not to protect it with high duty rates. Instead, the industry should be made competitive, and wherever there are gaps, they should be addressed with incentive schemes,” the organization noted.

Suggestions to Eliminate Duties

To attract global value chains and increase production on a large scale, ICEA has suggested reducing all duty rates that significantly raise costs to zero. Additionally, the report recommends removing the 2.5 percent duty on components and raw materials used in product assembly. “These duty rates do not serve any purpose. Instead, they increase costs and complexity for manufacturers,” ICEA emphasized.

ICEA’s recommendations aim to create a competitive environment for domestic manufacturers and build a strong ecosystem for component manufacturing in India. By lowering the costs and complexities associated with manufacturing, ICEA believes India can become a significant hub for mobile manufacturing, competing effectively on the global stage.