The hike in basic customs duty on imported finished goods proposed in the Union Budget for 2020-21 could make mobile handsets costlier by 2-7%, according to industry experts, reports Livemint.
While fully imported mobile phones account for a very small portion in the Indian market, the increased duty on components and other ancillaries announced in the budget may have a cascading effect on the selling prices of the handsets, experts believe.
As per budget proposals, duty on chargers will increase to 20% from 15%, while that on motherboards or printed circuit board assembly (PCBA) to 20% from 10%. Duty on other components used in making mobile handsets will also increase in a similar range.
Faisal Kawoosa, founder and chief analyst of research firm techARC, said the duties will have a 4-7% impact on the final selling price of imported phones. “If we are pushing for a deeper level of smartphone manufacturing to happen from India then the impact (of duties) has to be higher. Otherwise, it isn’t enough incentive for manufacturers to source locally.”
Pankaj Mohindroo, chairman of India Cellular and Electronics Association (ICEA), the apex industry body of mobile and electronics industry, said the market for imported mobile phones is hardly 3-3.5%, where because of existing duties, there is already a thriving grey market. However, the increase in PCBA duty to 20% will impact the dynamics of the feature phone industry. Currently, around 6% of the PCBA consumption is imported, so over the next few months this market will also shift to India, he added.
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