Mobile phones and tablets are set to become expensive as the excise duty on these devices has been increased. The Indian government has proposed an increase on the import cost of these devices to 12.5% from existing 6%, in its Union Budget. According to many analysts and industry insiders, the reason behind the increase is to support the domestic manufacturers of these devices, such as Micromax, Lava, Celkon etc.
"Excise duty structure for mobile handsets including cellular phones is being changed from 1% without Cenvat credit or 6% with Cenvat credit to 1% without Cenvat credit or 12.5% with Cenvat credit. NCCD of 1% on mobile handsets including cellular phone, remains unchanged,” as stated in the printed copy of the Union Budget, which was presented by the finance minister, Arun Jaitley on Saturday.
Many analysts also pointed out, that the Budget also implied a jump of 4-5 percent in importing cost for manufacturers who import handsets into India, which would cause a direct impact on the consumers. For example, if a phone costs Rs 10,000, the import cost comprises about Rs 6,000 in the total value. Now, the import cost will be going up by another Rs 360, which will be charged from buyers.
Lava International, which constitutes a fine share in the Indian smartphone market, said in a statement to Economic Times that the change in the duty will lead to price hike on its devices. "We will have to increase prices by say 4-5%," said co-founder and Chairman and Managing Director Hari Om Rai. "We will take a call on the exact increase and since when it will get into effect soon," he added.
Handset makers like Samsung, Lava, Micromax, Intex, Xiaomi and others imported around 64.3 million devices in October-December quarter, according to IDC, which tracked their record on a quarterly basis.
The conclusion to this hike in the excise duty is that, now the consumers would have to shell out extra money for buying mobiles and tablets. The Union Budget 2015 also caused a similar impact on the mobile phone tariffs, computers and other digital products such as cameras.
