On the same day of Goods and Service Tax (GST) roll out across the country, the Government also imposed a 10 percent basic customs duty (BCD) on cellular mobile phones and specified parts of cell phones such as chargers, battery, wired headphones, microphones, keypad, USB cables, and receivers.
An official statement from Government stated: "The Government had constituted Inter-Ministerial Committee comprising of officers from Ministry of Electronics and Information Technology, the Department of Commerce, Department of Telecommunication and Department of Revenue to identify electronic / IT / telecom products, which are not Information Technology Agreement, for customs duty enhancement on them."
Also, the basic customs duty charges of 10 percent will also be applicable for "certain other specified electronic goods," but the government did not disclose the items.
"The present exemption from basic customs duty on specified parts of mobiles, namely, Printed Circuit Board Assembly (PCBA), Camera Module, Connectors Display Assembly, Touch Panel / Cover Glass Assembly, Vibrator Motor / Ringer will continue," read the statement.
"Further, inputs and raw material for the manufacture of parts of above-specified electronics goods including mobile phones will also continue to be exempt from BCD," the statement added.
The changes will be implemented from today. With this move, Government is indirectly asking international companies such as Foxconn and Wistron to manufacture devices in India itself.
Furthermore, Indian Cellular Association President, Pankaj Mohindroo said: "The replacement of differential duty with BCD will protect and enhance India’s credibility about its resolve to build robust mobile phones and component manufacturing industry. The 500 million production target for 2019 will become a reality with this and a few more critical measures like an appropriate export promotion dispensation."
Already various international brands are setting up manufacturing plants in India to produce the mobile phones locally, which is also expected to lower the prices of devices. For example, Apple's official phone maker, Wistron has already set up a plant in Bengaluru and also allegedly selling the iPhone SE assembled in India.
Also, a report from Indian Cellular Association (ICA) revealed that excess of 175 million units valued Rs. 90,000 crore were produced in India in FY17. The number is up from 100 million handsets worth Rs. 54,000 in FY16. Also, a counterpoint research report claims 80 percent of mobile phones sold in India in March are locally made.