Mobile phone industry says custom duty hike to boost mfg

Mumbai, PTI: The mobile phone industry has appreciated the budget proposal to hike customs duty on mobile phones saying it will increase the share of local manufacturing.

Finance minister Arun Jaitley today announced a hike in customs duty on mobile phones to 20% from 15% in a bid to boost local value addition in domestic electronics manufacturing.

Chinese firm OnePlus that operates in premium smartphone category said around 85 per cent of all smartphones sold in country are now produced locally and this is an opportune time to introduce next set of regulations to attract investment in manufacturing.

"We are fully committed to the Indian market and welcome the proposed regulations. Currently, all OnePlus smartphones are produced locally and we are exploring ways to further increase the share of local manufacturing to ensure there is minimal cost impact of any new regulations to the end customer," OnePlus India General Manager Vikas Agarwal said.

China-based Xiaomi, a leading smartphone player in the Indian market, declined to comment on the Budget but it is learnt that more than 95% of the devices it sells in India is manufactured here so the customs duty hike would have little effect.

According to research firm Gartner the high-end devices are, however, likely to be impacted.

"More than 80 per cent of mobile phone demand is met locally but premium, high-end smartphones still depends on imports which will get hit by proposed increase in duty. Increase in duty will further strengthen proposals under consideration for local mobile phone production," Gartner Research Director Anshul Gupta said.

Presenting the Budget, Jaitley said h was making a calibrated departure from the usual practice of reduction in customs duties. "The move will lead to creation of more jobs in the country," Jaitley had said.

Besides the 5% custom duty hike on mobile phones, specified parts and accessories of mobile phones have seen a duty hike to 15 per cent from the current range of 7.5-10%.

Domestic handset maker Micromax's co-founder Rajesh Aggarwal said, "As India is becoming the global hub for manufacturing, the measures taken by the government will surely grow confidence amongst the manufacturers and I strongly believe that this will further create business and human resource opportunities as well."

Concurring with him Panasonic India and South Asia President and CEO Manish Sharma said, "increasing customs duty on imported products and components to boost local manufacturing is consistent with the government's Make-in-India initiative."

The MSME sector, which forms the backbone of the electronics industry will also benefit from reduction in corporate tax from 30% to 25% and the allocation of around Rs 3,800 crore for the development of the sector will translate to strengthening the electronics eco-system at large, he added.