Government may restore 2% additional duty incentive on mobile phones export

The government is likely to restore 2 per cent additional duty incentive on mobile phones export with effect from January 1, a source said. This duty benefit, which will help boost exports, is expected to continue till March 31, 2020.

A notification in this regard is likely to be issued soon.

The Directorate General of Foreign Trade (DGFT) on December 7 had reduced export incentive from 4 per cent to 2 per cent.

"There is a proposal to give 2 per cent additional export incentive on mobile phones till March 31. It will be effective from January 1, 2020 onward. The order is likely to be issued in this regard within a week," a source aware of the development told PTI.

The India Cellular and Electronics Association (ICEA) had written to the government expressing disappointment on reduction of the incentive, saying it will lead to massive job losses.

When contacted ICEA Chairman Pankaj Mohindroo said that "mobile phone exports have taken off. The growth from Rs 1,300 crore in 2017-18 to over Rs 25,000 crore this year is staggering to say the least. The reduction of Merchandise Export from India Scheme (MEIS) from 4 per cent to 2 per cent for such a deserving sector was a rude shock to the industry and extremely disruptive to supply chain. An immediate restoration is not only necessary but well deserved too."

The Manufacturers' Association for Information Technology (MAIT) has proposed incentive in the range of 8-10 per cent and also expressed concern on the reduction of export incentives.

Reacting to the proposal, MAIT CEO George Paul said the government had been sensitised on the need for a support framework as "we do not expect MEIS to continue".

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"It is critical we do this as the industry waited till December 30, 2019 for a new framework. None came, now it awaits the budget to address this need. This new framework is very critical for India as if a reverse flow starts, it will not only see a reduction in exports, but also halt in new investments," Paul said.