The upcoming budget might see a surge in import duties by 5 to 10 percent on more than 50 items including smartphones, electronic components and appliances.
This move is in line with Prime Minister Narendra Modi's 'Atmanirbhar Bharat' or self-reliant India that aims at promoting domestic manufacturing.
The government is seeking to target additional revenue of about $2.7 billion to $2.8 billion from this increase in import duties, Reuters reported citing sources. This will help the government which is struggling from low tax revenues and rising fiscal deficit amidst the COVID-19 pandemic driven slowdown.
However, India's apex electronics makers body has urged the government to slash the import duties as they are no longer a threat to Indian manufacturers.
The India Cellular & Electronics Association (ICEA) in a presentation to the revenue department on Budget 2021 suggested the government to reduce the 20% basic customs duty on mobile phones, because of large scale manufacturing of handsets in India. This is also because import duty is creating a large arbitrage and promoting the grey market of high%end devices.
ICEA said that the proposal of reduction of GST on mobiles from 18% to the earlier 12% is a must to curb the emerging grey market.
The industry also sought to raise the budget allocation to promote Centres of Excellence (CoE), R&D and focused incentives aimed at promoting strategic segments of the industry.
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