Smartphone Makers Press India For Export Credits, Lower Tariffs

An association of smartphone manufacturers that includes Apple, Huawei, Oppo and Foxconn has submitted a 174-page report to the Indian government asking for export credits on units and tariff cuts on imported parts, according to Reuters.

The India Cellular and Electronics Association (ICEA) said that its proposed measures would make India a global smartphone-making hub. The ICEA turned the report into the government ahead of its annual budget announcement, which is expected next week.

The ICEA is proposing a raise of the export credit on the value of phone shipments to go up to 8 percent from 4 percent. It’s also asking for a 5 percent export credit on services like mobile apps. The association is also seeking lower import taxes on capital goods, including machinery, and is requesting that manufacturers get access to low-cost capital.

“As the country is nearing to achieve saturation point … without an export takeoff, manufacturing growth cannot be sustained and accelerated,” the ICEA said in the report.

The Indian government began a “Make in India” campaign in 2014, gradually increasing the taxes on imports of smartphone parts and creating more than 600,000 jobs and 260 manufacturing units.

India is the second biggest mobile phone maker in the world behind China, and many large companies, like Oppo and Samsung, have increased production for mostly domestically sold phones.

However, the government will begin its taxing of imports on touch panels next month, which is two months earlier than was planned. The move sends the message to manufacturers that setting up the ability to assemble the panels is going to be a huge expense.

Navkendar Singh, an associate research director at consultancy International Data Corp., said the move sends conflicting signals to manufacturers. “Consistency in policy is important for any industry to mature,” he said. “Back-and-forth in policy hurts investor sentiment and the country’s positioning as a destination to manufacture.”

It’s the touch panel import, though, that has caused the most concern for smartphone makers.

Samsung, for example, has told the government it can’t make two of its higher-end phones because of the tariff. The company was apparently investing in a touch panel assembly plant in the country, which would have been ready by 2020.

“Despite some improvement in exports since 2015, India still has a long way to become an export hub,” the ICEA said.