The Department of Telecommunications (DoT) has approached the finance ministry recommending a 15-year tax holiday on domestic mobile manufacturing in order to revive the manufacturing sector in the country. According to DoT, the domestic demand for mobile phones is expected to reach 1,000 billion in 2015. However, looking at the declining mobile production on the domestic level, the government must introduce incentives to promote locally-manufactured products.

DoT, through its investment cell, has also suggested levying a lower uniform value added tax (VAT) of 4-5 per cent compared to 8.80-15 per cent across the country. The measure would help reduce the prices of mobile phones and other related products.

Apart from this, the telecom department has sought extension of section 35 (AD) of the Income Tax Act on producers of mobile phones, tablets and their accessories to allow a 150 per cent deduction of capital investments, when calculating their tax liability.