Govt announces phased manufacturing programme for mobile handsets

Domestic value addition in manufacturing of smartphones to go up from 10% to 26%

Ministry of Electronics and Information Technology (MeitY) on Thursday, announced a Phased Manufacturing Programme (PMP) with the objective of promoting depth in the domestic manufacturing of cellular mobile handsets.

This programme will be rolled out over a period of time and has been prepared keeping in view the state of the design and manufacturing ecosystem in the country. The goverment is focusing on ensuring that,  through appropriate fiscal and financial incentives, indigenous manufacturing of cellular phones and various sub-assemblies can be promoted over a period of time.

PMP has been notified with the objective of substantially increasing the domestic value addition for the establishment of a robust manufacturing eco-system for mobile phones in India.

The programme shall enable the mobile and related industries including the sub-assembly and component industry to plan their investments in the sector. The phase-wise programme covers mechanics, die cut parts, microphone and receiver, key pad and USB cable in the current financial year.

The introduction of differential excise duty dispensation in the Budget during 2015-16, countervailing duty (CVD) on imports of mobile handsets of around 12.5 per cent and excise duty of 1 per cent without input tax credit gave an impetus to the Assembly, Programming, Testing and Packaging (APTP) model in the sector.

As a result of the PMP, the domestic value addition in manufacturing of feature phones will go up from about 15 per cent to 37 per cent and the domestic value addition in manufacturing of smart phones will go up from about 10 per cent to 26 per cent.

Around 40 new mobile handset manufacturing units and 30 mobile components and accessory manufacturing units were started during the last two years, resulting in the direct employment of over 1,00,000 persons.

This will give rise to indirect employment by creating work opporunities for an estimated 2,00,000 persons. Indigenous production of mobile handsets went up from 11 crore units in FY16 to 15.5 crore units. Total value went up from Rs 54,000 crore in FY16 to Rs 90,000 crore in the previous financial year. As a result of the increase in domestic production of mobile handsets, the share of imported mobiles in the domestic market is gradually coming down.

"It is our roadmap to ensure an increase in the domestic value addition in manufacturing of mobile handsets. It will give a huge impetus to local mobile manufacturing and will help us meet a significant portion of the global handset requirement over a period of time," Aruna Sundararajan, Secretary, MeitY said.