"The domestic market for mobile handsets is expected to cross 300 million devices in 2015, while the number of devices being manufactured locally is expected to be only 46 million," said a report by Ficci-EY titled 'Speeding Ahead on the Telecom and Digital Economy Highway'.
Citing the example of Vietnam, which has emerged as a global hub for manufacturing of mobile handsets because of favourable incentive schemes and stable regulatory environment, it said there is a need for incentives for setting up of new handsets and tablets manufacturing units in the country.
In spite of India's market growing at a robust rate, almost 83 per cent of the demand is met via imports, while domestic production and manufacturing continue to lag, the report said.
"It is imperative that measures are taken to address this mismatch and reduce dependence on imports. Correcting this imbalance will not only lead to saving of foreign exchange but also result in build-up of local capabilities and job creation," it said.
To further the efforts under 'Make in India' programme, DeitY has established a joint task force of industry representatives and government officials with an aim to achieve production of 500 million handsets by 2019, it said.
"The task force aims to rejuvenate the mobile handset and component manufacturing ecosystem in the country and targets to create additional employment opportunities for 1.5 million people," it said.
It recommended bringing handsets under provisions of 'Goods of Special Importance' of the Central Excise Tax Act, 1956, thus capping the maximum VAT levied by states at 5 per cent and also endorses a 10-year tax holiday on a block of 15 years on all profits and gains for manufacturing in the mobile phone industry.