The smartphone manufacturing industry got some relief during the Union Budget as Finance Minister Nirmala Sitharaman proposed a 5% reduction in the import duty on smartphones. Not only smartphones but the charges and smartphones PCBA are also getting a customs duty reduction of 5%. This puts the new customs duty on components at 20 percent from 15 percent.
“With a three-fold increase in domestic production and almost 100-fold jump in exports of mobile phones over the last six years, the Indian mobile industry has matured. In the interest of consumers. I now propose to reduce the BCD (Basic Customs Duty) on mobile phones, mobile PCBA, and mobile chargers to 15 percent,” she said during the speech.
The announcement comes at a time when India is pushing to be the next big manufacturing hub behind Vietnam and China. Analysts believe that the move will have a direct impact on the prices of entry-level smartphones and 5G phones under Rs 15,000 may become more affordable in the coming days.
“The proposal to reduce the BCD on mobiles, charges, and mobile PCBA will further allow the smartphone value chain to work collaboratively towards making affordable 5G smartphones. We have seen since the launch of 5G smartphones the growth has been favouring premium segments. This opportunity is almost exhausted by now. We need to now look at interventions that could help in making affordable 5G smartphones,” Faisal Kawoosa, chief analyst at Techarc told Times Network.
While he expressed joy over the reduction, Kawoosa added that it would have been better if there was a slab-wise approach, where 5G smartphones up to 15,000 would have a higher reduction to further help affordability.
Meanwhile, the decision should also boost India’s local manufacturing capabilities, believes Prabhu Ram, VP – Industry Research Group (IRG) at CMR.
“The reduction of basic customs duty to 15% for smartphone parts marks a pivotal move towards further deepening India’s domestic manufacturing capabilities. This initiative aims to foster bolster local assembly, attract global investments, and propel India towards becoming a global hub for smartphone manufacturing,” he told Times Network.
