The Ministry of Communications and IT has stated that a tax holiday of ten years on a block of 15 years should be granted to manufacturers of mobile phone on all profits to encourage investments. The Ministry has also suggested that the finance Ministry extend benefits under Section 35 AD of the Income Tax Act to cover mobile phones, mobile tablets and their parts, as well as the telecom tower sector. The suggestions come ahead of the Union Budget 2015-16 to be disclosed in February 2015.

The Ministry is of the view that such provisions will facilitate fresh investments under the ‘Make in India’ programme. While the domestic demand for mobile devices is estimated to reach one trillion by the end of 2015, local production will be able to meet only one-fourth of the demand. Further, the manufacturing of mobile handsets has shifted to Vietnam owing to better regulatory environment and incentives in the country. This has also impacted domestic production of mobile handsets and tablets. According to the directorate general of commercial intelligence and statistics (DGCIS), the country has imported telecom equiment worth Rs 615.39 billion in 2012-13 and Rs 741.16 billion in 2013-14. Meanwhile, so far proposals worth only Rs 12 billion have been received for the telecom equipment sector during the past two years.