In a bid to boost local manufacturing of smartphones, the Indian government has increased the custom duty on mobile phone imports to 20 percent. It was 10 percent in July 2017, and therefore this hike in custom duty feels very steep.
In fact, the custom duty on a few smartphone parts like PCBs, camera modules, connectors, and other components have also been hiked to 15 percent. This means that assembling in India will also be expensive. This is what the finance minister Arun Jaitley said in his speech, “I propose to increase customs duty on mobile phones from 15% to 20%, on some of their parts and accessories to 15% and on certain parts of TVs to 15%. This measure will promote creation of more jobs in the country.” What you need to note here is that Jaitley wants to create more jobs in the country, indirectly signalling that India wants to promote local manufacturing.
Interestingly, Syed Tajuddin, CEO, Coolpad India, believes that component prices for high-end smartphones could go up. He said, “The increase in custom duty from 15% to 20% will definitely hamper the cost to customer, especially when it comes to getting repairs for the high-end devices. While increase in custom duty on handsets will compel brands to manufacture or assemble more in India, still there is not great support for local ecosystem for manufacturing spare parts. And this lack of local spare part manufacturers will mean a tough situation for mobile handset brands. Hence a brand is compelled to import most of the spare parts and customers have to bear some burden of it.”
We can safely presume that smartphone prices could go up in the next few months. And considering we saw a phone breach the 1 lakh rupee price tag last year, 2018 could set a new benchmark in high-end smartphone prices.