Union Budget 2020-21 recently announced basic customs duty hike on imported goods. This includes a price hike on mobile handsets and their parts. The cost is likely to rise by 2-7%, according to industry experts.
The budget proposes a boost of 10% to 20% on the duties of motherboards and Printed Circuit Boards (PCB). techARC founder Faisal Kawoosa explains, “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." India is currently dependent on imports to meet the smartphone demands.
India Cellular and Electronics Association (ICEA) Chairman, Pankaj Mohindroo predicts that the grey market will increase in size and thrive if imported smartphones and their parts become costlier. Significant changes will be made to the smartphone manufacturing sector when PCBA duty increased to 20%. As of now, 6% of the PCBA consumption is imported. The market direly needs to be shifted to India.
Smartphones costing Rs 40,000 and mostly imported, including Apple. Some of the Apple products will remain unfazed due to their domestic manufacture. Google Pixel, Samsung Note 10 Plus will suffer the most as they’re highly imported.
Some of the industry experts deem it as a really good move because it warns consumers and distributors that the levy can take another jump in the future. It’s better to set up our own units to create smartphones with impressive features.
Home-owned companies like Micromax, Lava, and Karbonn are considered 3rd grade mobile manufacturers. Unless they stop getting smartphones assembled in South-east and East Asian countries, they won’t receive the recognition they deserve. These manufacturers need to take an initiative in the direction to establish home-made phone manufacturing units.