17 Top Budget Impacts On Your Tech Buy

April 2016

Exhibit

Unveiling the Union Budget 2016-2017, the Finance Minister listed nine pillars that will transform India. These include tax reforms, ensuring fiscal discipline, infrastructure investment, promoting ease of doing business, agriculture, rural sector, social sector, education and job creation. Giving fillip to entrepreneurs, reducing corporate tax rates, focus on ease of doing business and dispute resolutions are some highlights for India Inc. Here are some of the key proposals introduced in the union budget 2016 that relate to India’s Electronics System Design Sector (ESDM).

- Pratik Ghone

The differential duty structure for mobiles and tablets which was introduced last year is being taken to the next level in the budget 2016 by including components and parts for chargers, batteries, wired headsets and speakers to nil duty on actual user condition.

Considering the finer details of tax proposals in the budget 2016, it is clear that a number of duties have been rationalised to promote manufacturing of a wide range of products such as routers, modems, set top boxes, DVR, NVR, CCTV cameras and others. Basic Customs Duty on some of the components which are not covered under ITA-1 has been re-introduced.

The budget has proposed introduction of SAD on populated PCBs for a variety of equipment which will surely increase EMS activity in the country and drive up the demand for components.

One challenge that would confront local manufacturers of components is that all components, parts and inputs had been brought to nil BCD, CVD and SAD and this could create obstacles for them, as stated in ELCINA’s report.

One of the long-standing demands of component manufacturers had been simplification of procedure for import of inputs at zero duty under Customs Notification 25/99 which has been highly cumbersome and has continued to baffle and confuse the industry. It is noteworthy that a Notification superseding the erstwhile Rules of 1996 has been introduced and hopefully this will simplify the procedure considerably and encourage the component manufacturers.