The new export incentive scheme under Merchandise Export from India Scheme (MEIS), which cuts the export incentive by half from the existing 4%, has received a lot of criticism from the electronics manufacturers in the country.
Taking about the latest decision, the Chinese smartphone manufacturer, Xiaomi, according to an ET report, said that the government’s move on export incentives will have a drastic impact on the business, threaten ongoing operations and future investments. The company further said that it will have a negative impact on the overall export potential for the electronics industry from India. Xiaomi, which accounts for 50% of all online smartphone sales in India, has invested over $2 Bn in India and has recently started exporting electronic products to Nepal and Bangladesh.
The electronic product makers body MAIT (manufacturers’ association of information technology), also urged the government to restore the 4-5% incentive under the MEIS.
Nitin Kunkolienker, the president of MAIT, in a letter to commerce minister Piyush Goyal, said, “We humbly request to review the notice and reinstate MEIS till a WTO-compliant production incentive is introduced for the electronics and the mobile phones manufactured in India.”
Kunkolienker further said that the $3 bn smartphone headset export segment will impact electronics manufacturing in India, where several contracts that are yet to be fulfilled may have to be been cancelled or served at a low-cost.
This comes at a time when the government had reportedly announced to make India the hub for smartphone manufacturing and foster electronics exports. For instance, the Noida-based ‘Make in India’ manufacturing hub recently announced that it will be manufacturing 30% of all the world’s smartphones by 2025.
Besides Xiaomi, other electronics manufacturers like Apple, Lava, ViVo, Oppo, Foxconn and Flextronics have also reached out to finance minister Nirmala Sitharaman, communications and IT minister Ravi Shankar Prasad, and commerce ministers Piyush Goyal, reportedly stating that the move would impact the present and future investments in electronics manufacturing.