Mobile phones to get cheaper as government eases import duty

Mobile phones are all set to become cheaper as the import duty of over 29 per cent has been reduced to 12.5 per cent on import of multiple mobile components.

In the Union Budget, the Centre introduced a duty of 29.441 per cent on the import of mobile chargers, batteries, wired headsets and speakers to encourage local manufacturing. The duty has been reduced to 12.5 per cent on chargers, batteries and wired headsets, while the duty has been completely withdrawn on speakers. An additional 2 per cent duty was also introduced on the fully-populated printed circuit boards (PCBs), which has also been completely withdrawn.

Pankaj Mohindroo, National President - Indian Cellular Association and Chairman – Fast Track Task Force for mobile manufacturing, welcomed the changes made to the duty structure on parts for the manufacturers of mobile phones.

While most of the mobile-makers including Micromax, Lava, Karbonn, Xiaomi, and Vivo etc have setup their manufacturing facilities in India, what happens so far in these factories is nothing but putting together of already manufactured components, which means less than 2 per cent of actual manufacturing process.

The Centre has been trying to change that by initially making it more expensive to import full mobile handset. The move immediately led to mobile makers setting up factories in India to at least assemble the components here. However, similar move to push for manufacturing of components such as batteries, speakers and headsets didn’t go as planned since the duty on these components was turning out to be higher than what was imposed on fully manufactured mobile phones.

“The Budget 2016 proposals had resulted in duty structure with high duty of 29.441 per cent on key parts like batteries, chargers and headsets compared to complete mobiles, which were at low duty of 12.50 per cent. The Finance Minister corrected this anomaly in his reply to Parliament Budget debate on May 5 by cutting the duty on the three parts to bring them to the 12.5 per cent rate for mobiles,” Mahindroo said.

Mobile makers also hailed the changes made in the duty structure.

“With these amendments, the hurdles on mobile manufacturers have been removed. The road is now clear for manufacture of both smartphones and relatively low value feature phones for the common man,” said Hari Om Rai, CMD of Lava International.

Even Chinese manufacturers welcomed the move. “We welcome the move by the government. It will help give the much-needed impetus to domestic manufacturing and help grow the industry,” said an official spokesperson of Vivo Mobiles.

The quick correction of course by the government will create the ecosystem for mass manufacturing of both mobile phones and parts in a balanced way, said Josh Foulger, Managing Director, Foxconn India.

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