India’s move to cut corporate tax will further propel manufacturers’ abilities to generate employment and invest more in local research and development (R&D).
“We are also hopeful that post the relaxation for domestic manufacturing firms, we are hopeful that we would be able to bring more of our component suppliers to India and help boost the local manufacturing industry further,” a Xiaomi spokesperson said in a statement.
HMD Global, which makes Nokia phones, said that the move will encourage more entries into the Indian market.
“The mobile OEM space sees multiple entries and exits each year and India is one of the few countries which is growing in this industry. While the substantially reduced corporate tax percentage will encourage more entries, one continues to look out for more such measures that improve ease of doing business,” Ajey Mehta, Vice-President and Region Head (APAC and India), HMD Global, said in a statement to ET.
Xiaomi’s spokesperson said that over 99% of the smartphones the company sells in India are manufactured locally. The PCBA, Battery and chargers are also locally sourced leading to nearly 65% of the value of the smartphone being locally sourced.
Xiaomi’s partner Holitech already started their local plant in India in Uttar Pradesh.
Prabhu Ram, Head-Industry Intelligence Group (IIG), CMR said that the targeted tax rate cut on manufacturing is a significant commitment to propel India as a global manufacturing hub.
“It is a victor’s move, to be seen in the context of the ongoing trade wars, and the global manufacturing supply chain realignment. India is the future, and had all the advantage thus far for global growth. Today’s reforms put India on par with other Asian countries, with its competitive tax rates,” Ram added.
Source: Economic Times