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Union Budget 2022: ‘Wide spread feeling of disappointment’ over duty hikes on electronic components, says industry body

The import duty hikes on several electronic components crucial to manufacturing mobile phones and their accessories proposed in the Union Budget have caused a “wide spread feeling of disappointment,” the industry body India Cellular & Electronics Association wrote in a letter to the IT Ministry. In fact, in some cases such as mechanics, this could be a “big setback and can collapse the developing mechanics industry vertical,” the association said.

The ICEA is an association of electronics companies and smartphone manufacturers and counts Apple, Oppo, Foxconn, and 3M, among others, as its members.

The import duty on components used to manufacture Printed Circuit Board Assemblies (PCBAs) has gone up to 2.5% from nil. Parts used to manufacture camera modules will also attract a similar duty. In fact, in some cases such as PCBAs used in manufacturing phone chargers, and camera modules, the duty has gone as high as 15%.

ICEA is expecting a marginal rise in mobile phone costs, somewhere in the range of 0.3% to 0.4%, as a result of these duty hikes. “The manufacture of intermediate goods between raw-material and final products may also be affected due to increase in costs, the domestic manufacturing can have a setback in short run,” ICEA said in the letter. On the GST front, the industry is “disappointed” on the non-reversal of tax from 18% to 12%.

However, there were some positives for the mobile phone and electronics industry in the Union Budget. ICEA is predicting manufacturing movement towards Special Economic Zones (SEZs). Advanced authorisation, which is issued to allow duty free import of inputs, will get a push, ICEA said. “All the schemes also have a domestic sale component which will make them attractive,” it added.

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The letter was sent by Pankaj Mohindroo, chairman of ICEA, and was addressed to Ajay Prakash Sawhney, secretary at the IT Ministry. MediaNama has seen a copy of the letter.

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