The Indian government is likely to offer an incentive of Rs 26 per mobile handset to be made in India, as around 70% of the allocated Rs 745 crore worth of incentives for electronics manufacturing is set to go to mobile handset manufactures based on the proportion of electronics being produced out of India, Cyber Media Research (CMR) said in a note on Friday.The government collects revenues of Rs 617 per handset by way of various duties and taxes at an average selling price of Rs 5,138, which is 24 times the incentive allocated per handset, the research agency said.
Finance Minister Arun Jaitley, in his Budget speech on Wednesday, had said the government increased allocations towards schemes such as Modified Special Incentive Package Scheme (M-SIPS) and Electronic Development Fund (EDF) to Rs 745 crore in 2017-18 aimed at creating an ecosystem to make the country a hub for electronic & tech manufacturing.
“Any incentive is welcome underlining the intent of the government, and the all-time high allocation is a great indicator in that direction. However, looking at the potential as well as the success story mobile phones have exhibited in a very short span of time in India, an extra mile effort would have been the icing on the cake',“ Faisal Kawoosa, principal analyst for Telecom and ESDM at CMR said in a note.
The agency said that electronics manufacturing in general and mobile phones in particular have become important contributors to the economy in recent years. Mobile phones have in fact gone beyond and are now being seen “as the hub of the Digital Nation that India is in the making“.
“We appreciate the fact that this is an all-time high allocation and a defined one for the first time that brings in more clarity about what one can expect as incentives. However... the incentive could have been a more encouraging one,“ he said.
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