Finance Minister P. Chidambaram Monday proposed to do away with a four percent central levy on mobile phone components to promote the sales of mobile handset and accessory industry.

Replying to a discussion on the finance bill in the Lok Sabha, he said there had been a demand from the industry to scrap the four percent central sales tax.

"In order to facilitate the growth of the mobile handset and component industry, I propose to exempt the manufacturers from the four percent levy," he said.

Already, handset maker Nokia has firmed up plans to set up a manufacturing unit in Chennai and other foreign players are looking at entering the sector.