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Fiscal Budget To Upscale FDI Inflow, Job Creation in Mobile Industry: Experts

Further, the push to FDI (foreign direct investment) in terms of withdrawal of dividend distribution tax along with the recently introduced lower corporate tax

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According to the India Cellular & Electronics Association (ICEA), the measures announced in the Union Budget will create the necessary momentum to build the $190 billion mobile phone industry with exports of $110 billion, as envisaged in the National Policy on Electronics 2019 (NPE 2019). Pixabay

With Finance Minister Nirmala Sitharaman announcing a new scheme to encourage manufacturing of mobile phones, semiconductor packaging and electronic equipment, mobile industry bodies and vendors on Saturday welcomed the move, saying the measures will spur investments into the sectors, while also increasing employment.

“The focus on technology and digital infrastructure is a step towards realising the trillion-dollar economy and will open up new opportunities for demand generation,” Subho Ray, President, Internet and Mobile Association of India (IAMAI), said in a statement.

According to the India Cellular & Electronics Association (ICEA), the measures announced in the Union Budget will create the necessary momentum to build the $190 billion mobile phone industry with exports of $110 billion, as envisaged in the National Policy on Electronics 2019 (NPE 2019).

“Further, the push to FDI (foreign direct investment) in terms of withdrawal of dividend distribution tax along with the recently introduced lower corporate tax of 15 per cent/22 per cent will be a major boost to the existing FDI and also act as a signal to the funds waiting outside to utilise the investment window opening in the economy,” said Pankaj Mohindroo, Chairman, ICEA.

“This makes India a very attractive destination for further substantial growth in FDI inflows,” Mohindroo added. India introduced new provisions in September 2019, offering a concessional corporate tax rate of 15 per cent to the newly incorporated domestic companies in the manufacturing sector, which start manufacturing by March 31, 2023. For existing companies, this has been brought down to 22 per cent.

Mohindroo also welcomed the introduction of Section 28DA in the Customs Act, which enables that preferential tariff treatment can be suspended or denied in certain cases where importers are not fulfilling the obligation imposed on them and also where time-bound verification from the importing country is not forthcoming. Smartphone makers also welcomed the thrust on mobile component manufacturing.

“The Union Budget’s significant focus on local production of mobile phones, electronics and semiconductor packaging is going to propel the ‘Make in India’ vision further. We are excited about the detailed scheme, which will follow soon,” said Nipun Marya, Director, Brand Strategy, Vivo India. Leon Yu, Regional Head, India & South Asia, Asus, said that the Budget has covered several pressing issues faced by the economy and is going to bring growth opportunities.

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“The focus on technology and digital infrastructure is a step towards realising the trillion-dollar economy and will open up new opportunities for demand generation,” Subho Ray, President, Internet and Mobile Association of India (IAMAI), said in a statement. Pixabay

“All eyes would be on the manufacturing sector with the Finance Minister proposing a scheme to encourage production of mobile phones, electronic equipment and semiconductor packaging. The new scheme, Nirvik, is also going to offer respite for exporters, promising to settle refunds for electricity and VAT previously levied,” said Yu.

In her Budget speech, Sitharaman said that fibre to the home (FTTH) connections through Bharatnet will link 100,000 gram panchayats this year. “It is proposed to provide Rs 6,000 crore to Bharatnet programme in 2020-21,” she said. India is currently the second largest smartphone market globally.

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“The Budget initiatives towards promoting electronics manufacturing in India, particularly mobile phones, semi-conductor packaging and electronic equipment, is certainly a positive for the industry and we expect this will attract investments, create employment opportunities for our young workforce and augment our ‘Digital India’ story,” said Sathish Gopalaiah, Partner, Deloitte India. (IANS)

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Smartphone Production in India Witnesses Substantial Decrease

The negative impact from the supply chain side will last until the end of Q2 minimum

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Smartphones
The smartphone production in India is already set to decrease by nearly 40 per cent amid nationwide lockdown as factories are shut and there are no online sales either. Pixabay

Smartphone players are unable to gauge the full impact of lockdowns and global recession and there is going to be a sharp contraction as consumers are in no mood to spend on buying new devices and rather focus on stocking essential items like groceries and other daily needs.

The smartphone production in India is already set to decrease by nearly 40 per cent amid nationwide lockdown as factories are shut and there are no online sales either. According to Counterpoint Research, they have looked at parallels from recent recessions to help guide their forecast.

“Our conclusion is that we expect to see a sharp contraction as consumers withhold making discretionary purchases during periods of maximum uncertainty. The result is an extension in the replacement cycle,” said Peter Richardson, Research Director, Counterpoint.

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“However, we expect that extension will be limited to no more than six months,” he added. There is a visible impact to new devices being launched in India as the components sourced from China are still impacted while factories resume operation slowly and cautiously in that country.

The negative impact from the supply chain side will last until the end of Q2 minimum. The bigger worry, however, is the disruption of the global supply-chain that is set to impact the manufacturing — from smartphones to consumer electronics.

“We further expect that the long run average market growth rate will not vary significantly – but the near term growth rates will reflect the slowdown and then rebound — a similar pattern to that seen in recent recessions but allowing for the different level of market maturity,” explained Richardson.

While smartphone manufacturing has picked up in India over the past few years, the country is still dependent on China to a large extent for supplies of components.

Smartphone
Smartphone players are unable to gauge the full impact of lockdowns and global recession and there is going to be a sharp contraction as consumers are in no mood to spend on buying new devices and rather focus on stocking essential items like groceries and other daily needs. Pixabay

The COVID-19 lockdown has also forced smartphone players to postpone new launches for an indefinite period as online retailers have prioritized their operations and services keeping the essential services in mind.

It makes sense for the original equipment manufacturers (OEMs) to defer new smartphone launches but, at the same time, support retailers who have been hit strongly, according to Tarun Pathak, Associate Director, Counterpoint Research.

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“It has to be a collaborative effort from the government to original equipment manufacturers (OEMs) and other players in the ecosystem to support the partners involved,” Pathak told IANS. (IANS)