Mobile phone exporters to get 4% incentive under duty drawback scheme

New Delhi: The government has increased incentive on exports of mobile phones to 4 per cent under the duty drawback scheme to boost shipments of handsets, according to an official notification.

The additional ad hoc incentive of 2 per cent under the Merchandise Exports from India Scheme (MIES) will be available for exports of mobiles from January 1 to March 31, 2020, period, the notification by the Directorate General of Foreign Trade said.

“A 2 per cent additional ad hoc incentive for mobile phones is notified for exports made with let export date from January 1 to March 31, 2020,” the notification said.

The directorate on December 7 last year had reduced this export incentive from 4 per cent to 2 per cent, attracting criticism from the industry which rued that the move would lead to massive job losses.

According to estimates, mobile phone exports grew from Rs 1,300 crore in 2017-18 to over Rs 25,000 crore at present.

Under the MEIS, the government provides duty benefits depending on product and country.

Rewards under the scheme are payable as percentage of realised free-on-board value and, MEIS duty credit scrip can be transferred or used for payment of a number of duties including the basic customs duty.

The increased incentive of 4 per cent or Rs 350 per handset whichever is less from the earlier cap of Rs 197 would help boost exports, industry said.

Commenting on the government move, India Cellular & Electronics Association (ICEA) Chairman Pankaj Mohindroo said, “ICEA has been relentlessly pursuing the Government of India to increase or introduce export benefits for the mobile phone industry. The increase in the Duty Drawback Cap has helped make exports more competitive. The All Industry Rate (AIR) of 4 per cent with a cap of Rs 350 is yet another step forward to build India as a global mobile phone manufacturing destination.”

The National Policy on Electronics 2019 has a target of exports of 600 million units valued at around Rs 77,000 crore for 2025-26.

“This increase of the duty drawback cap from Rs 197 per unit to Rs 350 per unit will encourage exports of mobile handsets from India and assist in meeting the NPE, 2019 export targets,” Mohindroo said.