Components imported by others than mobile handset manufacturers will be eligible for the benefit of concessional rate of duty. This is going to less the burden on mobile manufacturers. Also, this will boost intermediate goods manufacturers and finally consumers will be benefitted by lower price.
A circular by Central Board of Indirect Taxes and Customs clarified that the expression ‘for use in manufacture of cellular mobile phones’ is intended to convey that the component should be used in manufacturing process for cellular mobile phones. This does not mean that the components should be imported by manufacturer of cellular mobile phones.
Therefore, “the goods being imported by the intermediate goods manufacturer who is MOOWR unit for further supplying after some manufacturing/ value addition to the final manufacturer of Cellular mobile phones are duly eligible for the benefit of concessional rate of duty under IGCR Rules, 2022, as long as all other conditions are met,” it said
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The MOOWR scheme, or Manufacturing and Other Operations in Warehouse, allows manufacturers to import raw materials and capital goods without paying duty. The scheme is part of the Customs Act of 1962.
At the same time IGCR (Import of Goods at Concessional Rate of Duty) scheme allows certain goods to be imported into India at a relaxed rate of customs duty, provided they meet specific criteria set by the government.
Typically, this concession is granted to promote industries, support innovation, or fulfil particular policy objectives. To benefit from this scheme, importers must ensure that the goods are used for the purposes specified under the concessional rate provisions.
The circular re-iterated that, the MOOWR unit may avail IGCR exemption along with duty deferment under MOOWR simultaneously, provided that the importer undertakes to comply with the additional conditions prescribed in the Concessional Notification and IGCR Rules therein including time-limit etc., in addition to MOOWR stipulations for those goods while supplying goods from its premises.
The circular noted doubts regarding availability of IGCR benefit for the MOOWR unit involving in import of certain goods, add value and then supply to final manufacturer of cellular mobile phones. Keeping these in mind a circular has been issued.
This is third important development for the mobile hand set manufacturers this year. Earlier in January, import duty on mobile phone spare parts lowered to 10 per cent from 15 per cent.
It was expected that such a move would benefit Original Equipment Manufacturers (OEMs) in reducing the cost, which will, in turn, be passed on to the end customer in the near term.
This move can help to drop smartphone prices by 3-5 per cent, empowering the consumers and making the devices affordable, especially in the entry and budget segments, experts said.
Second major decision was taken in July, when Finance Minister Nirmala Sitharaman announced cut in import duty on mobile phones and some key parts to 15 per cent from 20 per cent. It is expected a move that would directly benefit Apple, which still imports its high-end smartphones into the country despite increasing local production.
According to India Cellular and Electronics Association (ICEA), during the 2014-2024 period, the sector did Rs 20 lakh crore cumulative smartphone production against a target.
In terms of volume, India produced 2.45 billion units of mobile phones during this ten-year period, against a target of 2.5 billion units, according to ICEA. On the export front, the industry body said that mobile phones have become India’s 5th largest export as an individual commodity.