NEW DELHI: The government has restored 2% additional duty incentive on mobile phones exports with a view to boost shipments of the product, according to a notification of the commerce department. The duty benefit under the Merchandise Export from India Scheme (MEIS) is effective from January 1 and will be there till March 31, 2020.
“A 2% additional ad hoc incentive for mobile phones is notified for exports made with let export date from January 1 to March 31, 2020,” the Directorate General of Foreign Trade (DGFT) has said in a notification.
ET had reported on January 10 that the government may continue the additional 2% duty incentive under MEIS after the issue was discussed at the Prime Minister’s Office. The additional 2% benefits under MEIS were announced in August to help exporters who had claimed that delayed Goods and Services Tax (GST) refunds were hurting business.
The directorate on December 7 last year had reduced this export incentive from 4% to 2% for all exports except garments and made-ups on December 31.
“We are glad that there is clarity on MEIS till 31st March, 2020 but there needs to be further extension,” said Pankaj Mohindroo, chairman, India Cellular & Electronics Association.He termed the uncertainty around MEIS an “extreme chill factor” for the industry.
In the wake of this uncertainly, mobile handset brands and thirdparty manufacturers were said to be putting their investments and hiring plans on hold.
Mobile phone exports dropped from Rs 3,000 crore in November 2019 to Rs 2,070 crore in December 2019. “The blip in the growth in December can be directly attributed to the uncertainty around MEIS,” he said.
As per estimates, mobile phone exports grew from Rs 1,300 crore in 2017-18 to over Rs 25,000 crore at present.