The Ministry of Electronics and IT has notified phased manufacturing programme to boost indigenous production of mobile phones by providing tax relief and other incentives on components and accessories used for the devices.
"The Phased Manufacturing Programme has been notified with the objective of substantially increasing the domestic value addition for establishment of a robust Cellular mobile handsets manufacturing eco-system in India," an official statement said.
The programme will enable the Cellular mobile handset and related sub-assembly and component industry to plan their investments in the sector, it further said.
With the implementation of PMP, the value addition or share of indigenously procured components in manufacturing of feature phones will go up from about 15 to 37 per cent and the same for smart phones will move up from about 10 to 26 per cent.
"This initiative will help in building a robust indigenous mobile manufacturing ecosystem in India, and we believe that it will incentivise large scale manufacturing.
"It is our road map to ensure an increase in the domestic value addition in manufacturing of mobile handsets," Ministry of Electronics and Information Technology (MeitY) Secretary Aruna Sundararajan said.
The phased manufacturing programme was proposed by a joint panel, Fast Track Task Force, of the industry and the government.
"This programme will be rolled out over a period of time... The focus is to ensure that through appropriate fiscal and financial incentives, indigenous manufacturing of cellular mobile handsets and various sub-assemblies, which go into manufacturing of handsets, can be promoted over a period of time," the statement said.
The phase-wise programme covers mechanics, die cut parts, microphone and receiver, key pad and USB cable in the current financial year.
It also aims to promote the indigenous manufacturing of populated printed circuit boards, camera modules and connectors in 2018-19, and display assembly, touch panels, vibrator motor and ringer in 2019-20.
"The programme will be extended to parts, sub-parts, inputs for aforesaid sub assemblies as the manufacturing ecosystem evolves over the next few years," the statement said.
The government is also in process of formulating second phase of PMP which it expects will enhance value addition to 58.3 per cent in feature phones and 39.6 per cent in smartphones.
"PMP-II is currently under preparation by the Fast Track Task Force, set up by MeitY," the statement said.
Fast Track Task Force Chairman Pankaj Mohindroo said the mobile industry is on a robust path of enterprise creation and developing a world-scale industry.
"We will not get entrapped by protectionism, but will create deep competencies, both cost and skills, which will create a globally benchmarked workforce and complementary industries intertwined with the global mobile phone and component ecosystem equally encouraging global and domestic enterprises," Mohindroo said.
Due to tax advantages given to local mobile phone manufacturers, 40 new mobile handset manufacturing units and 30 mobile components and accessory manufacturing units have been set up in the country in the last two years.
These facilities have resulting "in direct employment for over 1 lakh persons. This will give rise to an estimated indirect employment for 2 lakh persons," as per the statement.
Indigenous production of mobile handsets went up from 11 crore units valued at Rs 54,000 crore in 2015-16 to 17.5 crore units valued at Rs 90,000 crore in 2016-17, the statement said.
"As a result of increase in domestic production of mobile handsets, the share of imported mobile handsets in total domestic demand is gradually coming down. The import of mobile handsets decreased from Rs 56,000 crore in 2015-16 to Rs 40,000 crore in 2016-17," it added.
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