Implementation of goods and services tax (GST) will bring tremendous benefits for domestic manufacturers of electronic components as cost of manufacturing will be significantly brought down.
“The local manufacturers will be able to pass on the tax benefit to consumers in the form of price reduction,” said the report titled, ‘Electricals & Electronics Manufacturing in India,’ jointly conducted by ASSOCHAM and NEC Technologies.
The study also observed that with the implementation of GST, multiple taxes and cascading effects of taxes will be eliminated.
Along with these benefits, firms will also be saving expenses incurred in warehousing and logistics which stood at approximately 5-8 per cent.
“The lower taxes, simplified tax structure and technology empowered tax compliance system will provide an ideal ecosystem to improve the current situation of electronics manufacturing in India,” said the study.
It also added that, GST will give a major boost to the Indian electronics industry thereby, leading to subsequent increase in demand of locally manufactured electronics.
“With the implementation of GST, the electronics manufacturers will reap in significant cost savings in warehousing and logistics,” finds the study.
Further, the report noted that even the demonetisation move of the government gave a boost to electronic payment devices with value of transactions getting almost doubled.
Besides, it is also certain to bring about innovations in electronic payment industry thereby leading to increase in number of point of sale (PoS) and mPoS (mobile point of sale) devices.
“Post demonetization, government has been promoting digital payments by introducing e-payments platforms such as BHIM, Bharat QR. All of these platforms will generate more demand for mobile phone,” the report reveals.
Moreover, the ASSOCHAM-NEC study recommended that India should focus on building capabilities across the value chain by reducing component imports and increasing local value addition if it has to become a robust manufacturing hub.