Telecom equipment manufacturers, in their pre-budget memorandum (2006-07) urged the government to bring down the Basic Custom Duty to zero on components, spares and accessories for after sales service and reselling.

The manufacturers also recommended that countervailing duty to be levied at eight per cent while parts and accessories should be brought under one classification and listed specifically to avoid disputes of classification and end use.

The Indian Cellular Association (ICA), an apex body of the mobile industry comprising manufacturers, brand owners, application and solution providers, distributors and retailers said that service tax levied on servicing, repairing and annual maintenance contracts for mobile cellular handsets should be waived.

The Association has pointed out that China has emerged as a major supplier of mobile handsets as well as its parts, components and accessories.

ICA said that the imports from China are entering India at very low values, sometimes the customs assessed invoice price of the finished product is below the cost of its raw material.

The result is that there is a poor chance of the existing industry servicing, ICA said.

''We recommend that while continuing the current policy, a strict watch should be kept on importers and the mobile cellular phones should be included in the sensitive list of items which are kept under watch by the Committee of Secretaries in the Commerce Ministry,'' ICA said.

Moreover mobile cellular connections must be excluded from the ambit of Fringe Benefit Tax since inclusion of cellular mobiles in the FBT and taxing their provisions separately does not make sense.

The Association also urged the government to fully expense all expenditure on acquiring a mobile cellular in the year of the purchase to the extent of 100 per cent.

Moreover, ICA has recommended restoration of the rates of depreciation on plant and machinery from the present level of 15 per cent to 25 per cent.

The additional charges may be raised from the existing 10 per cent to 20 per cent. This will bring the total depreciation to 45 per cent which, ICA says is reasonable considering the obsolescence rate in the industry and the actual renewal and replenishment rates.

(http://news.webindia123.com)