Manufacturing ecosystem, uniform tax rate for handsets called for

November 2nd, 2011 - 7:07 pm ICT by IANS  

New Delhi, Nov 2 (IANS) With handset demand expected to rise to 350 million per year by 2020, there is need to create a manufacturing ecosystem, focus on research and development (R&D;) and ensure uniform tax rate for mobile handsets in India said a study Wednesday.

“Set up handset manufacturing cluster parks that would enable a sustainable ecosystem for the manufacture of mobile handsets in the country,” said the study — Mobile handsets: providing mobility to every Indian — jointly prepared by Federation of Indian Chambers of Commerce and Industry (FICCI) and research and accountancy firm Ernst & Young.

“There should be a focus on R&D; activities on handset designing and manufacturing. This in turn would facilitate innovation, intellectual property rights creation and faster commercialisation,” it added.

According to the study, the parks should focus on having strong forward and backward supply chain linkages. It also said that a detailed component supply roadmap needs to be developed by starting manufacturing certain parts such as chip-sets, keyboard, plastic elements and battery.

The study also sought support through grants for handset design companies.

On exports, the study said that the government should create a sizable export promotion fund for the telecom equipment and services export. Handset exports from India may be included in bilateral trade agreements with emerging markets in regions such as South Asia, Africa, Latin America, Russia and Eastern Europe.

It also called for application of a uniform value-added tax rate applicable across the country and said that in the upcoming goods and services tax (GST) regime, handsets should be taxed at a uniform rate of four percent.

India is the world’s second-largest telecom market after China, with the total wireless subscriber base crossing 850 million at the end of June 2011.

In 2020, 505 million handsets are estimated to be manufactured in India and even the average selling price of handsets is estimated to increase to Rs.2,950 as compared to Rs.2,300 in 2010.

The affordability of feature-rich handsets is also expected to be a key enabler of handset adoption. In addition to feature phones, smart phones are expected to lead the handset growth in India.

The number of 3G subscribers also is expected to cross 300 million by 2020.

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