Indian Government Increases Custom Duty on Mobile Phones to 20% From 15%

During the Annual Budget Speech held today, Arun Jaitley, Finance Minister said that the government had increased the custom duty on mobile phones from 15% to 20%. He said that this move is to make the brands manufacture devices in India and also to push the ‘Make in India’ initiative. And guess what, this move will impact the Cupertino giant, Apple which imports most of its smartphones from China. The same custom duty on mobile phones was 6% back in 2014.

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It is also said that the import fee on key components such as PCBs, cameras, etc. will be 15% going forward. Meaning, this move will even hurt the brands which are assembling devices in India.

Just a couple of months back, the Indian Government increased the import duty tax from 10% to 15%, followed by which Apple increased the prices of iPhones. And now, the Tim Cook-led company may increase the prices further, which will impact the overall brand image in the country.

So with this move, brands who haven’t started manufacturing mobile phones in India will hurt the most. In the case of Apple, the company started assembling iPhone SE in India, but other popular smartphones such as the iPhone X, iPhone 8 Plus, etc. are being imported from China itself.

And as stated, this duty tax increase is the third one in the last 12 months. In February 2017, the Government increased it to 10%, which is followed by the increase to 15% in December 2017, and finally, it’s now increased to 20%.

In addition, the Government also increased custom duty on assembling parts such as printed circuit boards (PCBs), connectors, USB modules, components, camera modules, etc. to 15%. Immediately after the Government’s decision, handset maker, Lava said that it would start assembling PCBs in India itself starting next month to take advantage of the new duty structure.

Next up, prices of smartphones will go up in the next few days, even the assembled smartphones in India will see a small price hike. It will be interesting to see how brands such as Apple tackles this new challenge from the Indian government. A recent Counterpoint report revealed that 3/5th of total 300 Million handsets were assembled in India last year.

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18 Comments on "Indian Government Increases Custom Duty on Mobile Phones to 20% From 15%"

 

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Unknown
February 2, 2018 3:10 pm 3:10 PM

Very good decision as it will force all manufacturers to set up their plants and industries in India, which indirectly solves the employment problem as people required to run these plants. And, cheap labours are available locally. And also, it will help in making India stronger in terms of production, as India may become world leader in near future like China at present.

Kaushik
February 1, 2018 11:12 pm 11:12 PM

This govt is good for nothing. Now mobile phone prices will increase. Tell me which commodity prices are reduced after modi govt took over?

tri_vis
February 3, 2018 11:10 am 11:10 AM

Seems like there are 2 users with name kaushik. Please use surname also, so readers don’t got confused.

Kaushik
February 2, 2018 1:23 am 1:23 AM

Well I don’t know. Things like electronics have definitely increased. In cities the prices have increased, in small town the essential and kitchen items prices have decreased, so have ayurvedic products.

Post GST I had noted that something as simple as atta cost much more in Mumbai but had reduced in Indore.

Bit concerning that govt. is not addressing the tier 1/2/3/4 areas divide with such duty and tax structure.

Jason
February 1, 2018 10:06 pm 10:06 PM

So making phones in India is lenient ? Do they also carry huge tax bracket like this? If Government gives good subsidy and help for mobile manufactures i am sure many will start making phone in India like Xiaomi.

I wonder how Chinese Government works, because most of phones are manufactured in China.

Kaushik
February 2, 2018 1:25 am 1:25 AM

China has something India doesn’t (and govt. just doesn’t get it): The world’s largest supply of transition and rare earth metals which are essential for electronic components. Even if you build labour and infra as cheap as you can get in China, you cannot match their output because India simply doesn’t have the raw material input to push that kind of quantity.

Jason
February 2, 2018 10:25 pm 10:25 PM

China seems to be a huge market as they have lot of resources and many Companies rely on China for production. In India we rely heavily on imports, either the whole product or the parts needed for the product. Micromax, just imports all the necessary things and put a label saying Indian product. But all the parts inside would have come from China.

Girish Gowda
February 2, 2018 7:41 am 7:41 AM

This is the biggest bunch of bollocks I have heard. If India was so short on raw materials, we wouldn’t have the massive raw material mafia plundering indian lands for decades under congress rule.

Kaushik
February 2, 2018 7:38 pm 7:38 PM

Please read: China rare earth metal trade. You will find they have 97% of the world production.

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