Lo­cal Phone Mak­ers Miffed Over Levy Giv­ing Ap­ple Edge

In­dus­try body seeks cut in im­port duty levied on ac­ces­sories as it puts cos with fac­to­ries in In­dia at a dis­ad­van­tage

The Economic Times - - Front Page - Wri­tankar.Mukher­jee @times­group.com

Kolkata: An in­dus­try body com­pris­ing lead­ing smart­phone mak­ers such as Sam­sung, Pana­sonic, Mi­cro­max, LG and In­tex has asked the gov­ern­ment to re­duce im­port du­ties levied in this year’s Bud­get on ac­ces­sories claim­ing it places com­pa­nies with lo­cal man­u­fac­tur­ing fa­cil­i­ties at a dis­ad­van­tage vis-à-vis Ap­ple and oth­ers which im­port and sell hand­sets and ac­ces­sories in ready-to-sell pack­ages.

“There is an anom­aly in du­ties which the gov­ern­ment should look into, as it will ben­e­fit only a few brands like Ap­ple which are cur­rently im­port­ing fin­ished goods and have no man­u­fac­tur­ing in­vest­ment in In­dia as com­pared to all the other smart­phone mak­ers who are in­vest­ing in In­dia,” said Ravin­der Zut­shi of CEAMA.

Zut­shi is the chair­man of the mo­bile and com­mu­ni­ca­tions coun­cil of the Con­sumer Elec­tron­ics & Ap­pli­ances Man­u­fac­tur­ers As­so­ci­a­tion (CEAMA).

This year’s Bud­get has levied 29% cus­toms duty on bat­ter­ies, charg­ers, adapters, speak­ers and wired head­sets that are im­ported by brands which man­u­fac­ture in In­dia. But im­porters of com­pletely built units have to pay only 12.5% on the same in­puts since these ac­ces­sories are pack­aged inside the box. Ac­ces­sories ac­count for up to 40% of the cost of mo­bile man­u­fac­tur­ing.

As a re­sult, the net ben­e­fit which the hand­set man­u­fac­tur­ers were en­joy­ing in In­dia com­pared with im­porters such as Ap­ple has con­tracted from 12-13% to just 5%. Mar­ket leader Sam­sung cur­rently man­u­fac­tures its en­tire port­fo­lio in In­dia while oth­ers like Mi­cro­max and LG too have be­gun lo­cal pro­duc­tion. All of them, un­like Ap­ple, im­port ac­ces­sories.

Two se­nior in­dus­try ex­ec­u­tives said some lead­ing brands have also di­rectly reached out to the gov­ern­ment against Ap­ple. Howe- ver, all such rep­re­sen­ta­tions are ver­bal and writ­ten com­mu­ni­ca­tion is lim­ited to a plea for cor­rec­tion of the duty anom­aly.

Sev­eral hand­set mak­ers have al­ready op­posed Ap­ple’s plan to sell re­fur­bished or pre-owned phones in In­dia, and in­dus­try ob­servers see these moves as the be­gin­ning of a united al­liance against the iconic smart­phone maker. A Sam­sung spokesper­son said the com­pany had not lob­bied against Ap­ple with the gov­ern­ment. “This in­for­ma­tion is base­less and in­cor­rect,” said the spokesper­son. Ap­ple cur­rently has an 11% value share of the In­dian smart­phone seg­ment, but in vol­ume terms it ac­counts for just 2%. Ap­ple ex­ec­u­tives in the past few quar­ters have made it clear that In­dia has emerged as a high-pri­or­ity mar­ket for the com­pany and CEO Tim Cook has re­cently said it is in­vest­ing in the coun­try for the long term.

Ac­cord­ing to Coun­ter­point Re­search, an agency that tracks hand­set sales, Sam­sung leads the In­dian smart­phone mar­ket with 36% value share, fol­lowed by Mi­cro­max at 12% and Ap­ple at 11%.

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