Business Other News 25 Sep 2019 Tax cut to boost sma ...

Tax cut to boost smartphone manufacturing

DECCAN CHRONICLE. | SANKALP PHARTIYAL
Published Sep 25, 2019, 2:02 am IST
Updated Sep 25, 2019, 2:02 am IST
China’s trade tussle with the US, which is pushing smartphone makers to seek alternative markets, is giving that fight an additional edge.
“This is a clear signal from the government to boost investors’ confidence in India’s economy,” said Vikas Agarwal, India head of China’s OnePlus, which makes its smartphones locally.
 “This is a clear signal from the government to boost investors’ confidence in India’s economy,” said Vikas Agarwal, India head of China’s OnePlus, which makes its smartphones locally.

MUMBAI: India’s lower corporate tax rate will help its smartphone industry expand, fuel research and development (R&D) investment and attract higher-value component makers to the world’s second-biggest smartphone market, four top industry executives said The government slashed its headline corporate tax rate to 22 per cent on Friday in a surprise gambit aimed at wooing manufacturers and boosting investment.

The country is currently vying with rivals like Vietnam to attract global firms such as Apple and encourage contract manufacturers like Foxconn and Wistron to step up their presence. China’s trade tussle with the US, which is pushing smartphone makers to seek alternative markets, is giving that fight an additional edge.

 

“This is a clear signal from the government to boost investors’ confidence in India’s economy,” said Vikas Agarwal, India head of China’s OnePlus, which makes its smartphones locally.

“It will directly affect a company’s profitability, help fuel consumption — but more importantly it also reflects India’s ambitions.”

The trade war between Beijing and Washington has led to higher tariffs on goods worth tens of billions of dollars and disrupted global supply chains, pushing companies to look at newer markets to escape higher tariffs. And India has already begun stepping up efforts to attract investment, especially in labour-intensive electronics manufacturing.

 

New Delhi last week scrapped a tax on imports of open cell TV panels, used to make television displays, in a move likely to boost television manufacturing in the country.

The arrival of global players has made India the world’s No. 2 mobile phone maker and the smartphone industry is central to Prime Minister Narendra Modi’s ambitious “Make in India” drive.

Friday’s announcement also cut taxes for any manufacturing firm incorporated on or after Oct. 1 and beginning production by March 2023 to an even lower rate of 17 per cent — less than rival countries.

 

That should help charm contract manufacturers that do not already have a presence in the South Asian country, such as Taiwan’s Pegatron and other firms which make higher-end electronics components.

The four senior smartphone industry executives said it was too early to speculate about how much more money their companies would commit to investing. But Indian smartphone maker Lava and China’s Xiaomi said the cut would help them generate more employment and step up investments in local R&D.

“We are hopeful that we will be able to bring more of our component suppliers to India and help boost the local manufacturing industry further,” said a spokeswoman for Beijing-based Xiaomi, India’s top smartphone player.

 

It makes 99 per cent of its devices locally through contract manufacturers and recently helped its supplier Holitech — a maker of camera modules and other parts — to set up a plant in northern India. The tax cut will help draw makers of components like phone display panels, lithium cells and camera modules, industry executives and analysts said.

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