Mobile handset makers today welcomed Budget 2012-13 retaining the excise duty of 1% on cellular phones.
"The Finance Minister has recognised mobile phones as merit goods. There is no increase in duty but the prices (of mobile handsets) will remain the same. The benefit to consumer will be that prices will not go up," Indian Cellular Association National President Pankaj Mohindroo told PTI.
Finance Minister Pranab Mukherjee announced to retain excise duty of one per cent on mobile phone, along with three other product categories which include coal, fertilisers and precious metal (gold and platinum) jewellery.
Retaining the excise duty to same levels will support government's service delivery initiatives, Director (Sales) of Nokia India, V Ramnath, said. However, he could not ascertain the impact that the budget announcement will have on handset prices.
"At this moment, it is too early to evaluate impact on prices," Ramnath said.
Though Samsung did not comment on the impact of the budget announcements on handset prices, its spokesperson said, "The budget has not offered any relief to the sector which is already reeling under high taxes. We do not expect positive impact on the consumer buying sentiment."
The Finance Minister also announced to reduce excise duty on parts of mobile phones, other than those cleared to a manufacturer of mobile phones, from 10% to 2% only in cases where the no central VAT credit is taken by manufacturer.
The government has also announced to exempt parts of memory cards from basic customs, countervailing and special addition duty (SAD), the benefit which given to parts, components and accessories for manufacturing of mobile handsets.
"Exemption of mobile phone parts from basic custom duties which while bringing down the manufacturing cost of mobile phones will aid in deeper penetration of mobile phone manufacturers into the untapped portions of the Indian market," Karbonn Mobiles Managing Director Pradeep Jain said.
Lava Mobile said that government's announcement to allow deduction of 200% tax liability on expenditure made in research and development will boost growth of home-grown handset companies and generation of Indian Intellectual Property Rights.
"Government has provided benefits for companies like us to invest on a core of R&D because for manufacturing and R&D services there is an increase in deduction of income tax from 150% to 200%," Co-Founder and Director, Lava International SN Rai said.
Rai added that on implementation of GST, the company may also decide on setting up of manufacturing base in India.
