India government announced an increase in custom duty for up to 10 percent on mobile chargers and some sub-parts of phones in another bid to boost domestic manufacturing.
The development will result into a 3-4 percent increase in the retail price of mobile phones in India from February 2.
Finance Minister Nirmala Sitharaman, during her Union Budget 2021-22 speech, said that withdrawing exemptions on parts of chargers and mobile phones will boost local manufacturing of smartphones in the country.
“Domestic electronic manufacturing has grown rapidly. We are now exporting items like mobiles and chargers,” Sitharaman said.
For greater domestic value addition, we are withdrawing a few exemptions on parts of chargers and sub-parts of mobiles. Further, some parts of mobiles will move from ‘nil’ rate to a moderate 2.5 percent,” she informed.
However, inputs or raw material for manufacture of specified parts like back cover, side keys etc. of cellular mobile phone has been increased from nil to 10 percent.
Inputs or parts of Printed Circuit Board Assembly (PCBA) of charger or adapter of cellular mobile phones are up from nil to 10 percent while the custom duty on inputs or parts of moulded plastic of charger or adapter of cellular mobile phones has also been increased from nil to 10 percent.
The 2.5 percent duty hike is applicable on inputs or parts for manufacture of PCBA of cellular mobile phones, inputs or parts for manufacture of camera module, manufacture of connectors and raw material, etc.
The new custom duty slabs for chargers and parts of mobile phones are applicable from February 2.
According to Tarun Pathak, associate director at Counterpoint Research, there is a focus on electronics manufacturing and increase in duty for certain sub components is a push to localise some of these components.
This might increase in prices for short term, or a very modest increase, as bulk of these sub components have already local suppliers like for camera modules, PCBAs, chargers and connectors, etc, Pathak told IANS.
The Centre has rolled out a production linked incentive (PLI) scheme for the electronics manufacturing sector, particularly for mobile phone manufacturing, to curb increasing imports.
Mike Chen, general manager, TCL India, said India needs to ease up the duty imposed on raw materials keeping in mind the make in India initiative.