Duty hike on phones set to hurt consumers

In a bid to protect domestic smartphone manufacturers, finance minister Arun Jaitley on Thursday hiked customs duty on mobile phones to 20% from 15% — a move that will force foreign players to pass on the burden to consumers.

“Customs duty on import of mobile phone parts will be increased to 20% from the existing 15%. This will boost jobs in the smartphone sector in India,” Jaitley said in his Union Budget speech.

While the intention is to incentivise domestic manufacturing, “this will lead to an increase in the prices for these products denting the middle-class consumers wallets”, reacted MS Mani, Partner, Deloitte India.

Domestic smartphones however, welcomed the government’s move.

“We welcome the announcement. This will help make India a global hub for mobile phone manufacturing. Local manufacturing will create more job opportunities,” said Sanjeev Agarwal, Chief Manufacturing Officer, LAVA International.

Chinese smartphone vendors, however, were critical of the government’s move. “The increase in custom duty 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.

According to industry experts, the customs duty hike will push foreign players towards manufacturing and sourcing components more within the country.

“This move will push almost all players to increase the assembling of mobile phones in India. From Apple’s point of view, it will certainly impact in the near term, possibly increase the prices of its flagships since most of them are being imported to India,” Navkendar Singh, Senior Research Manager, IDC India, told IANS.

In December, the government had increased customs duty on various items, including mobile phones, to 15% from 10%.

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