Lok Sabha Question No. 5221 (UNSTARRED), answered on 2019-07-24
Subject: Mobile Manufacturing in India
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: K. Shanmuga Sundaram, Kanakmal Katara

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED  QUESTION NO.5221

TO BE ANSWERED ON 24.07.2019

## MOBILE MANUFACTURING IN INDIA

## 5221.

SHRI SHANMUGA SUNDARAM K.: SHRI KANAKMAL KATARA:

Will the Minister of Electronics and Information Technology be pleased to state:

- (a) the quantum of mobile phones and its accessories imported in the country during each of the last three years and the current year;
- (b) whether the Government proposes to promote the setting up of more manufacturing factories by mobile companies in the country;
- (c) if so, the details thereof and the steps taken by the Government in this regard;
- (d) whether  the  Government  proposes  to  levy  additional  duties  on  import  of  mobiles  and  its components and if so, the details thereof; and
- (e) the other steps taken by the Government to encourage the indigenous mobile manufacturers?

## ANSWER

## MINISTER FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI RAVI SHANKAR PRASAD)

- (a):    The quantum of mobile phones and its accessories namely, power bank, headset and USB cable imported in the country  during each of the last three  years and the current  year are as under [Source: Directorate General of Commercial Intelligence and Statistics (DGCIS)] :

(Quantity in crore nos.)

| Item                                                       |   2016-17 |   2017-18 |   2018-19 |   2019-20 (upto May, 2019) |
|------------------------------------------------------------|-----------|-----------|-----------|----------------------------|
| Mobile Phone falling under HS 851712                       |      7.58 |      9.05 |      2.7  |                       0.07 |
| Power Bank (Lithium-ion) falling under HS 85076000         |     10.94 |     18.38 |     62.74 |                       9.48 |
| Headset falling under HS 85183000                          |     30.09 |     37.14 |     44.98 |                       7.32 |
| USB Cable falling under HS 85444220, 85444292 and 85444299 |      0.75 |     19.72 |     26.91 |                       3.01 |

(b) to (e): Government is promoting the setting up of manufacturing factories for mobile phones and their accessories and parts in the country.  Steps taken by the Government in this regard are annexed.

The imports of mobile phones attract Basic Customs Duty (BCD) of 20% and there is no proposal under consideration of Government to levy additional duty on import of mobile phones. However, BCD is being imposed  on  the  specified  sub-assemblies  and  parts  of  mobile  phones,  in  accordance  with  the  Phased Manufacturing Programme (PMP).

Notification  of  PMP  has  enabled  the  mobile  phones  and  related  sub-assemblies/  parts  manufacturing industry to plan their investments in the sector.

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Annexure

## Steps taken by the Government for the promotion of setting up of manufacturing factories for mobile phones and their accessories and parts in the country

- (i) Tariff Structure has been rationalized to promote domestic manufacturing of electronic goods, including, mobile phones and their accessories and parts.
- (ii) To promote domestic value addition in mobile phones and their accessories and parts, a Phased Manufacturing Programme (PMP) has been notified. As a result, India has rapidly started attracting investments into this sector and  significant  manufacturing  capacities  have  been  set  up  in  the  country  during  the  past  four  years.  The manufacturing of mobile phones and their accessories and parts has been steadily moving from Semi Knocked Down (SKD) to Completely Knocked Down (SKD) level, thereby progressively increasing the domestic value addition.
- (iii) The National Policy on Electronics 2019 (NPE 2019) has been notified on 25.02.2019. The objective of the NPE 2019, inter-alia ,  include targeted production of 1.0 billion (100 crore) mobile phones by 2025, valued at USD 190 billion (approximately INR 13,00,000 crore), including 600 million (60 crore) mobile phones valued at USD 110 billion (approximately INR 7,00,000 crore) for export.
- (iv) Modified  Special  Incentive  Package  Scheme  (M-SIPS)  provides  financial  incentives  to  offset  disability  and attract  investments  in  the  electronics  manufacturing  sector.  The  scheme  was  open  to  receive  applications  till 31.12.2018 for new projects as well as expansion projects. The scheme provides 20-25% subsidy for investments in capital expenditure for setting up of an electronic manufacturing facility (20% for SEZ Units and 25% for nonSEZ  Units).  The  incentives  are  available  for  44  categories  of  electronic  products  and  product  components, including mobile phones and their accessories and parts.
- (v) The Electronics Manufacturing Clusters (EMC) Scheme was notified to provide financial support for creation of state-of-art infrastructure for electronics manufacturing units. The scheme was open for receipt of application for a period of 5 years, i.e., upto 21.10.2017. Further period of 5 years is available for disbursement of funds for the approved applicants. Under the scheme, financial assistance for Greenfield EMC was available upto 50% of the project cost subject to a ceiling of INR 50 crore for every 100 acres of land and for Brownfield EMC, 75% of the cost of infrastructure, subject to a ceiling of INR 50 crore was provided as Grant.
- (vi) As per extant Foreign Direct Investment (FDI) policy, FDI upto 100% under the automatic route is permitted for electronics manufacturing, subject to applicable laws/ regulations; security and other conditionalities.
- (vii) For promotion of exports in the sector, Merchandise Exports from India Scheme (MEIS) and Export Promotion Capital  Goods  (EPCG)  Scheme  are  available  under  the  Foreign  Trade  Policy,  2015-20.  MEIS  offers  export incentives so as to offset disabilities of manufacturing. Zero duty EPCG scheme allows import of capital goods at zero customs duty, subject to specified export obligation.
- (viii) The  import  of  used  plant  and  machinery  having  a  residual  life  of  at  least  5  years  for  use  by  the  electronics manufacturing industry has been simplified through the amendment  of  Hazardous  and  Other  Wastes (Management and Transboundary Movement) Rules, 2016, vide Ministry of Environment, Forest and Climate Change Notification dated 11.06.2018.
- (ix) Notified  capital  goods  for  manufacture  of  specified  electronic  goods,  including  mobile  phones  and  their accessories and parts are permitted for import at 'Nil' Basic Customs Duty.
- (x) The  Department  of  Revenue  vide  Notification  No.60/2018-Customs  dated  11.09.2018  has  amended  the Notification  No.158/95-Customs dated 14.11.1995, relaxing the ageing restriction from 3 years to 7 years for specified electronic goods manufactured in India and re-imported into India for repairs or reconditioning.
- (xi) In order to ensure safety of Indian citizens by curbing import of substandard and unsafe electronic goods into India,  Ministry  of  Electronics and  Information Technology (MeitY) has notified 'Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012' for mandatory compliance. As per the provisions of the order, the manufacturer has to get the product tested in laboratories recognized by Bureau of

Indian  Standards  (BIS),  take  registration  from  BIS  and  put  the  registration  mark  on  the  product.  44  product categories including mobile phones and their specified parts have been notified under the order. (xii) The Government has notified Public Procurement (Preference to Make in India) Order 2017 to encourage 'Make in India' and to promote manufacturing and production of goods and services in India with a view to enhancing income  and  employment.  In  furtherance  of  the  aforesaid  Order,  MeitY  has  notified  local  content  for  11

- Electronic Products, including mobile phones.
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