India Cellular and Electronics Association (ICEA), the top institution of the mobile and electronics industry, has demanded reduction in duty rates on raw materials to build a strong ecosystem of components. ICEA has made this recommendation based on the study of duty rates in seven competitive economies including India. In its report released on Tuesday, the organization said, “High duty rates on raw materials limit the engine of growth, which increases production. High duty rates on raw materials reduce exports, as they are no longer competitive in terms of price and the production of the final product, i.e. mobile phones, is reduced. The solution to this problem is a reduction in duty rates on raw materials. ”

Developing domestic supply chain is important
It said, “We believe that developing domestic supply chain is very important, but the right way is not to avoid high duty rates. Rather, for this, the industry has to be made competitive and wherever there are shortcomings, it needs to be removed by bringing incentive schemes. ICEA said that to attract global value chains (GVC) and increase the scale of production, all the duty rates that increase the cost significantly need to be brought down to zero.

Industry harmed by duty rates
The report also suggests removing 2.5 percent duty rates on components and raw materials used in assembling the product. It said, “These duty rates do not serve any purpose. On the contrary, it is only increasing the cost, complexity and compliance for the manufacturers.” The industry body said that the government should provide appropriate policy and financial incentives from a long-term perspective to support the manufacturing of components on a large scale.