The Indian government has put a 10% customs duty on multiple parts of smartphones which are imported to the country from October 1, 2020. This is likely to result in increased prices of smartphones. ‘Make in India’ initiative is in full flow for the past few months with major companies such as Apple shifting its production of iPhones to India. DTH operators such as Tata Sky and Dish TV are also shifting the manufacturing of Set-Top Boxes to India. However, the customs duty applied to the imported parts is going to increase the cost of production for the companies. Hence for the smartphone industry especially, the users might see increased rates of devices. More on the story ahead.
Custom Duty on Parts of Smartphones Will Result in Higher Prices
As per an ET Telecom report, LG is continuing with the manufacturing of its smartphones in India despite the 10% customs duty on the smartphone parts to be imported into the country. The Korean giant supports the ‘Make in India’ initiative of the government.
The increased cost of production could result in an increase in the prices of smartphones. The display assembly, touch panel/cover glass assembly are all set to become expensive for a company to acquire.
The industry had earlier requested the government to not levy this tax on the parts for at least one year. The reason behind the request made by the industry was that these parts aren’t manufactured locally yet. So the companies don’t have any other option but to import it from outside the country.
One solution to this problem would be to equip local manufacturers and vendors with the appropriate knowledge and technology. This would help them manufacture imported parts locally.
However, there is nothing confirmed about the prices yet. LG has made no official comments on whether this would increase the prices of smartphones. Only time will tell how much price will increase for smartphones. The components affected by the tax comprise 25% of the bill for a device. So there is a strong possibility of this affecting the price of the devices, but as mentioned, nothing’s confirmed yet.
