Govt losing Rs 2.4K cr to phone smuggling, says handset industry

The industry, in a representation to Finance Minister Nirmala Sitharaman, Commerce and Industry Minister Piyush Goyal, and Electronics and IT Minister Ravi Shankar Prasad, has stated that there is an immediate need to rationalise duties down to Rs 4,000 per phone beyond a landed priceof Rs 20,000 for imported phones.

Phones in this range sell for nearly double the price in the open market, after adding duties, GST and margins as well as marketing, distribution and inventory holding costs for the entire supply chain, which includes brand owners, manufacturers, national and regional distributors and retailers.

In a detailed letter, the leading industry association for mobile handset manufacturers - India Cellular & Electronics Association (ICEA) - whose members include Oppo, Vivo, Flextronics, Foxconn and Apple — has argued that a change to a flat rate would wipe out the losses to the exchequer and result in an additional earning of Rs 1,000 crore on account of GST collection.

The letter further states that mobile phones imports constituted 78 per cent of India’s total market requirement till the year 2014-15.

In the year 2018-19, it fell to between 5-6 per cent and is expected to fall further to 4-5 per cent in 2019-20. This was a result of the rapid indigenisation programme. In revenue terms, however, this makes a significant dent on GST collections.