NEW DELHI: The mobile handset industry, which employs over 6.7 lakh persons, has expressed concern over reduction of export incentives to 2 per cent and said that it will lead to massive job losses.
Industry body India Cellular and Electronics Association (ICEA) said discussions have been going around between the industry and the government for the past three months to replace the Merchandise Exports from India Scheme with a WTO-compliant scheme but the Director General of Foreign Trade surprisingly notified downward revision of the export incentive.
“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, will result in immediate collapse of exports of one of the few sectors that has responded positively to the MEIS scheme,” ICEA Chairman Pankaj Mohindroo said in a letter to the ministries concerned.
The DGFT on December 7 reduced export incentive from 4 per cent to 2 per cent. The Manufacturers’ Association for Information Technology (MAIT) has proposed incentive in the range of 8-10 and also expressed concern on the reduction of export incentives.
ICEA in the letter to Finance Minister Nirmala Sitharaman, Commerce and Industries Minister Piyush Goyal and Telecom Minister Ravi Shankar Prasad on December 9 said members of the body, including Apple, Vivo, Oppo, Foxconn and Lava, have approached it saying they will be forced to cancel their exports and “retrench large-scale employees” which have been hired in the past 6-8 month.
“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,” ICEA said.
ICEA also said the “sudden U-turn” in the policy will have far reaching implications on India’s reputation as a destination for stability in policy and attractive in investments.