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Distrust between tax officials and customs has made India one of the worst places to do business: ICA

Distrust between tax officials and customs has made India one of the worst places to do business: ICA

NEW DELHI: Mobile industry body Indian Cellular Association (ICA) today criticised the business climate in India saying cumbersome processes have emerged out of distrust between tax officials and customs authorities.

“Ease of doing business…there are very few countries we can compete with, obviously from the bottom. Probably, this is the worst country to do business in. That is a very frank statement I want to make,” ICA National President Pankaj Mohindroo said at an event organised by IAMAI.

He said that IGCR (Import of goods at concessional rate of duty for manufacture of excisable goods) processes are very cumbersome in the country.

“There is no trust between customs authorities and taxation authorities. Most ridiculous thing that I have ever heard is that there is target given for revenue collection,” Mohindroo said.

He said that lack of ease of doing business is very upsetting to the industry.

Industry players raised concerns over huge capital getting blocked in bank guarantees given as assurance to customs that the items imported by them on concessional duty rates will not be retailed in the market and will be used solely for making mobile phones. As per data available in April, it is estimated that bank guarantees to the tune of Rs 29,000 crore have been furnished by companies.

Ajay Kumar, Additional Secretary, Ministry of Electronics and IT who was present at the event, countered Mohindroo’s claim saying that there has been continuous improvement when it comes to doing business in India.

“India has jumped up several position in global indices released on ease of doing business. Now, government gives 30 clearances in one day on e-biz portal for which people were required to approach similar number of offices. Ease of doing business is a continuous improvement process and India is on right track,” Kumar said.

The Fast Track Task Force, a joint government and industry body, has an objective to achieve production target of 500 million mobile phones by 2019 and generate employment for 15 lakh by 2019.

Mohindroo, who heads the task force, said the target can be achieved only if India is able to match competitors like China and Vietnam.

“China today is around 82 percent of global manufacturing, which means it produces 20 lakh mobile phones per year. We are very elated that (mobile production) in India has reached Rs 90,000 crore, Vietnam is already at 3 lakh crore. We have to match them in terms of direct taxes what Vietnam and China are able to give,” Mohindroo said.

He said that direct tax in China in special cases is around 10 percent while in Vietnam it is nearly zero.

Mohindroo said exports will play key role to achieve the target set by 500 million mobile phones production in India.

“Pakistan does not permit Indian mobile phones to enter Pakistan, which is closest biggest market, and we have given most favoured nation to Pakistan. This is not fair. I think Commerce Ministry has to take a lot of lead in this.

Bangladesh, Sri Lanka, Nepal, also don’t give us any credits,” he said.

Mohindroo, however, appreciated the government decision to impose 10 percent basic customs duty on mobile products.

He said that in 1-2 years, India will start exporting mobile chargers to China.

“If we are able to export electronics and electricals to China, that means the competitiveness has set in,” he said.