Telecom Lead India: The Union Budget 2012 presented
by the finance minister Pranab Mukherjee gives some respite to the mobile
industry in India, as it exempts mobile phone parts from basic custom duties.
The exemption of the mobile phone parts from basic custom
duties will aid in deeper penetration of mobile phone manufacturers into the
untapped portions of the Indian market.
Furthermore, the exemption will help bringing down the
manufacturing cost of mobile phones.
In Indian market, domestic vendors such as Micromax,
Spice, Karbonn and Lava have been making low-cost cell phones and the move to
exempt mobile phone parts from basic custom duties will help these vendors
to lower their production cost, which will help them to focus on quality of
Additionally, this move will help these domestic vendors
to compete with leading manufacturer such as Nokia, Samsung, HTC and Motorola.
These domestic vendors have already launched low-cost
smartphones in a bid to drive demand as they attempt to move up the value chain
from low-cost feature phones.
For 2011, Micromax is among the top manufacturers of
multi-SIM mobile handsets with 8 percent market share. Other domestic
manufacturer such as G’five and Maxx are also striving to increase their market
share in the Indian mobile market, accoding to Cyber Media Research.
Pradeep Jain, MD of Karbonn Mobiles welcomes Budget
“We as a constituent of the ever-evolving
communication sector of the country would like to welcome the forward-looking
Union Budget for 2012-13. By taking progressive policy measures the Finance
Minister has been able to put forth a proposal which will definitely take the
country on a path of progression,” said Pradeep Jain, MD of Karbonn Mobiles.
Karbonn Mobiles welcomes the finance minister’s move to
cut customs duty on memory cards for mobile phones which while complementing
the usage of storage cards will definitely help in increasing the usage of
extensive mobile phones in the country, Jain added.
Not only multi-SIM mobile handsets, but these domestic
vendors are trying to mark their presence in 3G and Smartphone market segment.
The government’s move to exempt mobile phone parts from basic custom duties
will definitely help them to improve quality.
In the overall India mobile handsets market, Nokia is
presently holding the leadership position with 31 percent share, followed by
Samsung at No.2 with 15 percent and Micromax at No.3 with 5 percent, in terms
of sales (unit shipments) during CY 2011.
The government has also cut customs duty on memory cards
for mobile phones which while complementing the usage of storage cards will
definitely help in increasing the usage of extensive mobile phones in the
Responding to Budget recommendations, Ashutosh
Prabhudesai, Controller & Director Finance, Fujitsu Consulting India, said:
“Finance Minister has demonstrated the in-principle acceptance for moving
towards unified GST by standardizing the tax rates across the spectrum of
services. The rationalization of tax slabs for non corporate income
taxes is also a step towards the implementation of direct taxes code. However
the excise duty increases and service tax rate increase would mean higher costs
for the industry. The pill could have been sweetened by a reduction in
corporate tax rates which did not happen.”