NEW DELHI: The budget may make mobile phones a tad expensive as the government sought to increase import duty on certain inputs used to make devices and chargers in order to boost domestic value addition.
A similar duty on compressors would also have a marginal impact on prices of ACs and refrigerators, though the industry said they would prefer to absorb these in view of the upcoming festive season.
Finance minister Nirmala Sitharaman announced review of 400 exemptions in customs duty, including those applicable on the mobile devices segment.
“For greater domestic value addition, we are withdrawing a few exemptions on part of chargers and sub-parts of mobiles. Further, some parts of mobile rate will move from nil rate to moderate 2.5%.”
She added that the custom duty policy must have twin objectives — promoting domestic manufacturing and helping India get on to the global value chain and thus export better.
“The thrust now has to be on easy access to raw materials and exports of value addition,” Sitharaman said.
As part of the move, the Budget proposed a 2.5% customs duty on the printed circuit board assembly (PCBA), commonly known as motherboard, camera module, connectors, parts and sub-parts to manufacture lithium-ion batteries and battery packs.
The import duty on PCBA for making any charger is proposed to be raised to 15% from the existing 10%.
The finance minister announced the withdrawal of duty exemption on components used for mobile chargers and imposed 10% duty on them.
Tarun Pathak, Director at research company Counterpoint, said a marginal increase in prices may happen because of the measures.
But he added that this may not be big enough to disturb consumer sentiment.
Pankaj Mohindroo, chairman of mobile devices industry body India Cellular and Electronics Association (ICEA), said the measures will have a dampening effect on the sector.
“There is a widespread feeling of disappointment in the proposals of duty hikes,” he said in a letter addressed to IT and Electronics Secretary Ajay Prakash Sawhney.
Sunil Vachani, chairman of contract manufacturer Dixon, however, said that the measure will help deepen the manufacturing eco-system in the country.
“In the long-term, it will make us globally competitive.”
Manish Sharma, the president & CEO of Panasonic India, said that while the duty on compressors will have an impact on the costing of ACs and refrigerators, the companies will not pass it on to the market.
“The summer season is around the corner, and we will not pass any hike on to the consumers. We do not want to disturb the market momentum, and will absorb as much as possible.”