NEW DELHI: The recent World Trade Organization (WTO) ruling asking India to roll back its export sops scheme has put New Delhi in a “spot,” said the India managing director of Foxconn, the world’s largest contract manufacturer.
Josh Foulger told ET that Foxconn’s plans to expand its manufacturing capabilities in India — to make more ecosystem devices, such as Internet of Things products — would depend on further clarity from the government on the new duty relief scheme for exports announced in September.
The new Remission of Duties or Taxes on Export Products (RoDTEP) scheme is slated to replace the existing Merchandise Exports from India Scheme (MEIS).
“The big question is the MEIS, which might get rolled back after the WTO ruling. It has put the government in a spot,” Foulger told ET. “India Cellular and Electronics Association (ICEA) is following up with the government … we are one of the larger players in India and are looking forward to a positive direction from the government.” He said the government was proactively seeking inputs from the industry, and Foxconn had already provided its views through the ICEA.
New Delhi has challenged the ruling. The government’s interest is to make for the world, which is good for the local industry, said Foulger, adding: “Hopefully, consultations will yield good results to make the economics work.”
MEIS provides for a duty credit scrip of 4% on exports, but it is unclear whether the RoDTEP scheme would provide the same dispensation, or will it expand or reduce it.
Since India wants to raise the level of exports, companies need clarity on whether it will offer better incentives or tax relief to promote local companies and global companies operating in India.
Foxconn, the largest manufacturer of iPhones, also makes handsets for the likes of Xiaomi and HMD (Nokia-branded phones) and had a lion's share of India’s contract market last year at 63%, according to Counterpoint Research.
Foulger said a lot of the company’s decisions would depend on the future and features of the RoDTEP scheme, which would allow the company to drive ‘mobile-plus’ capacity. “We will look at all possible opportunities to support our customers,” Foulger said, when asked about expanding its manufacturing beyond smartphones.
He added the next 36 months would be crucial for the country in terms of technology with the emergence of Internet of Things, Big Data and artificial intelligence. “Mobile phones and all ecosystem products will be propelled by 5G,” he said.
Foxconn recently expanded its facility to help Xiaomi address the rising demand for its phones in the country.
“The relationship between us (Foxconn-Xiaomi) is a very close relationship. If there is any opportunity for close synergy, we will explore it. However, the core is around the smartphone,” Muralikrishnan B, chief operating officer, Xiaomi India, told ET.
“In the recent past, corporate tax reduction is something in the right direction. The ease of doing business has improved. Not only do we see progress on the policy front, but also on the ground, changes with different state governments … it is very synergistic to enable manufacturing,” said Foulger.
Published On : 26-11-2019
Source : Economic Times
