According to the ASSOCHAM-KPMG joint study, Indian handset market recorded over 350 million shipments in the year 2017 as compared to 280 million in 2016, a surge in revenue from Rs 111,000 crores in 2015 to Rs 135,000 crore in 2016.
The study says, smartphones have also gained immense popularity in India in the last four years and constituted 43 percent of the total handset shipments in 2016.
Indian handset exports flourished from 2008 to 2012 going up to Rs 12,000 crores but were interrupted by a decline of almost 30 per cent in two subsequent years. Accompanied by a parallel fall in handset manufacturing, a downfall of handset manufacturing industry became a major area of concern for the government, noted the study.
Further, 'Make in India', 'Skill India', and other initiatives taken by the government played a pivotal role to achieve an 85 per cent growth in handset manufacturing recorded in the year 2015-16 (Rs 54,000 crores) over the previous year, which in 2016-17 grew to Rs 90,000 crores.
The industry is of the view that the government may increase the MEIS incentive and introduce new incentives such as freight equalization subsidy and enhance duty draw back to 3 percent to attract more players, a study said.
Other countries such as Vietnam and China, offer significant incentives by way of direct tax holidays which provide a very cost effective platform for handset manufacturers to set up production facilities.
Vietnam provides tax exemptions to players for the first four years of revenue generation and levies only 10 per cent for the next 11 years, which may be extended to 26 years on approval of the Vietnamese Prime Minister.
These initiatives by governments of other countries make those countries favorable for market players to undertake to manufacture, raising their global competitiveness, highlighted the study.