The Finance Ministry has slashed import duties by 5 per cent on various components required for mobile handsets. Though some experts feel prices could come down by 3-5 per cent, some are unsure of any price reduction.
According to a Finance Ministry notification, duty has been lowered on components such as battery cover, front cover, middle cover, main lens, back cover, GSM Antenna/Antenna of any technology, PU case/Sealing Gasket – Other articles of Polyurethane foam like sealing gaskets/case, sealing gaskets/ cases from PE, PP, EPS, PC and all other individual polymers or combination/combinations of polymers, SIM socket, screw and side key for use in manufacture of cellular mobile phones beside others.
All these will not attract import duty at 10 per cent as against 15 per cent. However, the notification has not specified any date for implementing lower duty.
Tarun Pathak, Research Director with Counterpoint, said: “This will benefit the OEMs in reducing the cost, which will, in turn, be passed on to the end customer in the near term. This move can help to drop smartphone prices by 3-5 per cent, empowering the consumers and making the devices affordable, especially in the entry and budget segments.
However, Faisal Kawoosa, Chief Analyst at Techarc, is unsure about a price reduction. ”OEMs might not be keen to pass this on to end consumers. Rather use this either in increasing channel margins or using it somewhere else. Since, all brands are riding on ‘premiumisation’,, bringing down costs isn’t the focus. So this savings gives them cushion to spend more. For instance, increasing the channel commissions at a time when all brands are expanding offline,” he said.
According to Pathak, entry and budget segments were the worst hit by the currency fluctuations and have witnessed price rises in the past year. “We can expect the entry-tier and budget segments to have a positive impact and witness growth in the coming quarters. On the overall components’ localisation drive, we believe that this move will not have an adverse impact, as it is an ongoing process. Also, we expect to see a boost in overall mobile phone production in India going forward,” he said.
Kawoosa felt that reducing the duty also indicates that dependence on imported components isn’t subsiding. The first duty was hiked at the first instance to promote localisation. Now, we are again decreasing it to give some comfort to OEMs to make in India. Somewhere, we must stop this roller coaster approach and be tough with the ecosystem to force timebound results. What surprises me is a lot of these are plastics and mechanical components, which we should have been developing in India by now,” he said.
Pankaj Mohindroo, Chairman of India Cellular And Electronics Association (ICEA), called this policy intervention by the Government towards making mobile manufacturing competitive in India. Building scale and riding on low input tariffs are key to transforming India into a global hub for electronics manufacturing and exports.
“Electronics has improved from the 9th position few years ago to India’s 5th largest export in 2024. Mobiles constitute over 52% of electronics exports thanks to the PLI Scheme. This is the first industry to leapfrog out of import substitution to export-led growth within the last 8 years. Government has been an excellent and willing partner in this transformation, “ added Mohindroo.