Import of unbranded Chinese handsets into the country has increased 90 per cent to 38 million units in the current year against 20 million units in 2009-10.
According to the Indian Cellular Association (ICA), the import of unbranded Chinese handsets has grown four-fold in three years from 5.5 million handsets in 2007-08. This is despite the various measures taken by the Government to prevent entry of unbranded handsets, including a ban on units without the International Mobile Equipment Identity (IMEI) number.
“Although mobile phone manufacturing has increased by leaps and bounds as compared to no production a couple of years ago, the industry continues to face challenges from the huge unbridled influx of the substandard unbranded Chinese phones into India. Even today, approximately 3 - 3.5 million substandard mobile phones are imported into India each month,” said ICA – the industry body representing handset makers such as Nokia, Samsung and Motorola.
To tackle the menace, handset makers have sought incentives to encourage local manufacturing, including a 15-year tax holiday on income generated from local manufacturing of phones.
Tax benefits
“Manufacturing involves huge investments and skilled manpower but there are no tax benefits for the industry, except for the SEZs. Tax holidays, available to other key sectors such as infrastructure and power, should also be available to mobile phone manufacturing to be globally competitive. The industry is labour-intensive and has good multiplier effect in terms of consumer welfare gains, specially education and efficiency of time,” the Indian Cellular Association said.
Most of the foreign phone companies have set up manufacturing units in India.
Security concerns
Security agencies have also sought strict measures against illegal entry of handsets. But the ban imposed by the Government on offering mobile services to handsets without the IMEI number remains only on paper. That is because operators continue to offer services to users owning handsets without the IMEI number.
IMEI is a unique 15-digit code that identifies a mobile. It prevents the use of stolen handsets for making calls and allows security agencies to track down a specific user. However, handsets sold in the grey market do not come with the IMEI, a matter of concern for security agencies, especially because most of the handsets are brought into the country from China or Taiwan.