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Pre-Budget recommendations 2012;
Mobile handset makers have sought action against unbranded Chinese phones flooding the market as part of the pre-Budget recommendations. The Indian Cellular Association, which is the industry body representing all the branded handset makers in the country, have also sought removal of the 1 per cent National Calamity Contingent Duty (NCCD) on mobiles phones.
“Unbranded Chinese mobiles have successfully captured the lower end of the urban market and the rural market by a combination of aggressive marketing and unethical practices. The import of substandard Chinese phones must be stopped by making the imports adhere to the law of the country regarding Custom and Excise duties as well as VAT and other consumer protection laws on quality,” the cellular association said in its submission to the Finance Ministry.
On NCCD the ICA said that the duty be shifted to other high volume goods to rotate the incidence on other industries in the interest of equity. “The continuation of NCCD itself may be reviewed,” it said. 2011, NCCD of 1 per cent on mobile imports yielded Rs. 255 crore. Domestic sale of Indian manufacturers gives another Rs. 121 crore bringing the total to Rs.376 crore.
The handset makers have also sought full exemption for five years on service tax on all data services such as internet, SMS, data transfer etc. other than voice telephony. “Rate for voice telephony may be raised by one percent to compensate for revenue loss in this five year gap,” the ICA said.
The phone makers have also raised concerns with the clearance of smart phones by the customs authorities. Apparently, all phones with screen size of more than 4 inches are being called
“Tablet PCs” and are slapped with a 10.4 per cent counter veiling duty applicable on computer
devices. The problem is further compounded when state VAT authorities call this very device as mobile phones since they work only with a cellular SIM card and are primarily designed for voice and data communication. “It is suggested that the matter may be resolved immediately. India has to enter the
world of smart phones in both manufacturing as well as use by the hungry youth in rural and urban
areas for data and voice communication. The grey area leaving discretion to the Customs and VAT
field formations is best avoided; by the issue of a suitable clarification,” ICA said.
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