20% custom duties on mobile phone to increase phone price, repair cost

smartphone

Finance Minister Arun Jaitley in Budget 2018 announced that custom duties on mobile phone and TV have been increased from 15 percent to 20 percent and this will help in creating a level playing field for companies that manufacture in India but according to smartphone makers this will put burden on customer more as the cost to customer are likely to increase. “The increase in custom duty from 15% to 20% will definitely hamper the cost to customer, especially when it comes to getting repairs for the high-end devices,” said Syed Tajuddin, CEO, Coolpad India.

Phone maker says that while increase in custom duty on handsets will compel brands to manufacture or assemble more in India, still there is not great support for local ecosystem for manufacturing spare parts. And this lack of local spare part manufacturers will mean a tough situation for mobile handset brands. Hence a brand is compelled to import most of the spare parts and customers have to bear some burden of it.

However, companies like iVooMi said that in last 2 years ecosystem in India has already taken first level growth and situation has improved. They believe that the required resources for making the phones in India are stable, hence this will fuel industry growth and boom localisation to next level. iVooMi said that 95 percent of its items are made in India and they will soon go 100 percent. “We will start the development of localisation for PCBA SMT, battery complete unit, transducers making in India to drive the growth to next level, targeting 2020 as completely designed and manufactured phone in India,” said Ashwin Bhandari, CEO iVOOMi India, adding that incentivising the higher level manufacturing (Surface Mount Technology, Injection Moulding, Optical Electronics) is recommended to expedite the design and development within Indian ecosystem.

Agreeing with Bhandari, Yogesh Bhatia, MD of Detel said that Budget 2018 revive the confidence of the domestic enterprenuers. “The increase in the customs duty on mobile phones and TVs was indeed a much needed move. The rejig will make imported products expensive and would provide further impetus to the ‘Make in India’ initiative of the Government”

Sanjay Kumar Kalirona, CEO & Director, COMIO also concurred the same view. He said, “The increased custom duty on mobiles will further boost local manufacturing and will be the essential push to create a manufacturing ecosystem in India.”

Homegrown companies like M-tech Informatics that demanded cap to be raised in pre-budget discussion said that they are happy as their demand have been met. “Increasing customs duty on mobile phone CBU [completely built units] imports to 20% from the existing 15% will prevent dumping of phones in the Indian market, boost domestic manufacturing and provide a level playing field to home grown brands,” said Vivek Agarwal, Co-founder, M-tech Informatics.