Reduction of Export Incentives will Lead to Massive Job Losses: ICEA

By Tanya Aneja

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  • Mobile phone production in India is 9-12 per cent expensive compared to cost in Vietnam and 19-22 per cent when compared with China
  • The mobile handset exports grew over eightfold to Rs 11,200 crore in 2018-19 and exceeded imports for the first time

According to a report by ET, the mobile handset industry, which employs over 6.7 lakh people, has expressed concern over the reduction of export incentives to 2 per cent and said that it will lead to massive job losses.

Indian Cellular and Electronics Association (ICEA) Chairman Pankaj Mohindroo informed that a sudden U-turn in policy will devastate exports and lead to massive job losses. This not only gives way to extreme policy uncertainty which is likely to scare investors both global value chains and Indian champions but in fact, it will result in the immediate collapse of exports of one of the few sectors that have responded positively to the MEIS scheme.

ICEA further stated that it will also lead to an immediate halt in future hiring and capacity expansion. Nothing can be worse at this time where the economy and the job situation in India is already precarious and under severe distress.

Mobile handset exports grew over eightfold

It also highlighted that the mobile handset exports grew over eightfold to Rs 11,200 crore in 2018-19 and exceeded imports for the first time. Handset exports during April-July 2019 reached around Rs 7,000 crore, thereby creating grounds to hit an annual figure of Rs 25,000 crore in the current financial year

It further informed that the export incentives were partially addressing severe disabilities that India faces compared to Vietnam and China. Mobile phone production in India is 9-12 per cent expensive compared to cost in Vietnam and 19-22 per cent when compared with China.

MAIT President Nitin Kunkolienker told the news daily that the decision by the government is not aligned with the vision of an export-led electronics manufacturing out of India from the electronics sector perspective.

He further stated that this will also negatively impact the ongoing work towards the creation of a value chain of electronics manufacturing in the country and further risk the employment creation emanating from electronics manufacturing.

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