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.
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.
