‘GST to reduce cost of manufacturing of domestic electronic components’

New Delhi, July 3 (IANS) The domestic manufacturers of electronic components will benefit from the Goods and Services Tax (GST) regime as the cost of manufacturing will be significantly brought down, a study said here on Monday.

"The local manufacturers will be able to pass on the tax benefit to consumers in the form of price reduction," said the study "Electricals and Electronics Manufacturing in India", jointly conducted by Assocham and NEC Technologies.

The study observed that multiple taxes and cascading effects of taxes will be eliminated with the implementation of the GST.

Along with these benefits, firms will also be saving expenses incurred in warehousing and logistics which stood at approximately 5-8 per cent, the study noted.

"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.

The study 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," said the Assocham-NEC study.

The report noted that even the government's demonetisation move gave a boost to electronic payment devices with the 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 demonetisation, the 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 said.

The study recommended that for India to become a robust manufacturing hub, it should focus on building capabilities across the value chain by reducing component imports and increasing local value addition.