With the Union budget 2018, customs duty on both mobile phones and mobile phone parts have been hiked from 15 per cent to 20 per cent. The move is likely to impact manufacturers who import mobile phone parts into the country and also those who are importing spare parts. While many players have ‘Made in India’ programs, when it comes to spare parts like display, battery, processors, most of these are still being imported from outside in India.
For consumers, mobile phones could become more expensive with the new hike in customs duty. Finance Minister Arun Jaitley said the hike was done to boost manufacturing in India, opening up more job opportunities in the sector. If one goes by the reactions of the smartphone players, most are positive the hike will boost manufacturing in India, though some players acknowledged that prices of devices could go up.
Chinese player OnePlus said that over 85 per cent of its mobiles are made in India. “This is opportune time to introduce next set of regulations to attract investment in the manufacturing sector and establish India as a global hub for electronics. At OnePlus, we are fully committed to the Indian market and welcome the proposed regulations,” Vikas Agarwal, General Manager at OnePlus India said in a press statement.
HMD Global, which is the manufacturer for Nokia phones, also echoed OnePlus’ thoughts on the issue and said their business will largely remain unaffected since most Nokia phones are being produced in India. “While the import duties for mobile phones increased to 20 per cent, along with a 15 per cent duty on key components, this will have a minimum impact on our business, as all of our current portfolio of Nokia phones are manufactured in India,” said Ajey Mehta, Vice President India, HMD Global in a press statement.
Home grown player Micromax said the move will encourage local manufacturing. “The government’s measures towards the import duty on printed circuit boards (PCBs), camera modules, connectors and other components that go into making smartphones, will boost the Make in India initiative and will relentlessly pursue in curbing imports and building value addition in the country,” explained Rajesh Aggarwal, Co-Founder Micromax.
Indian players like Lava International also welcomed the hike on customs duty. “We welcome the announcement on custom duty increase in mobile phones. This will provide a big boost to the Make-in-India campaign by the government,” Sanjeev Agarwal, Chief Manufacturing Officer, Lava International said.
Another Indian player Comio called the budget a positive step for mobiles. “The increased custom duty on mobiles will further boost local manufacturing and will be the essential push to create a manufacturing eco-system in India,” said Sanjay Kumar Kalirona, CEO and Director for Comio Mobiles.
Chinese player ZTE also agreed the hike in basic customs duty will encourage major smartphone players to open manufacturing in India. “With the increase in Basic Custom Duty from 15 to 20 percent, the government has shown the encouragement to major smartphone players in setting up their manufacturing units in India. This step apart from supporting the Make in India movement, will also create job opportunities,” Sachin Batra, Director Marketing at ZTE telecom India said in a press statement.
Motorola, which is owned by Lenovo, said that they have doubled production capacity in India in the financial year. “The current move will provide stimulus to the government’s ‘Make in India’ initiative and further enhance the manufacturing sector leading to job creation. Our journey of Make in India began three years ago and we have been manufacturing and assembling at our manufacturing unit through our global contract manufacturing partner Flextronics,” Sudhin Mathur, Managing Director, Motorola Mobility India, said in a press statement.
Another major Chinese player Huawei said the move would strengthen local manufacturing. “Earlier this week, we have begun production of our latest bestseller the Honor 7x and will continue to add to our production portfolio,” pointed out P Sanjeev, who is Vice President Sales Huawei India, Consumer Business Group.
New players like iVooMI also welcomed the move. Ashwin Bhandari, CEO iVOOMi India said resources required for making the phones in India are stable and the customs duty hike will take localisation to the next level. Meanwhile, Chinese player Coolpad pointed out that the manufacturing infrastructure for spare parts was still not enough in India.
“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. 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,” said Syed Tajuddin, CEO, Coolpad India.