Budget 2021: Phones may get costlier as govt raises custom duty on parts

In another bid to boost domestic manufacturing, the government on Monday announced an increase in custom duty for up to 10 per cent on mobile chargers and some sub-parts of phones, a move that can make handsets costlier by 3-4 per cent from February 2.

Finance Minister Nirmala Sitharaman, during her Union Budget 2021-22 speech, said that withdrawing exemptions on parts of chargers and mobile phones will boost local manufacturing of smartphones.

"Domestic electronic manufacturing has grown rapidly. We are now exporting items like mobiles and chargers," Sitharaman said.

"For greater domestic value addition, we are withdrawing a few exemptions on parts of chargers and sub-parts of mobiles. Further, some parts of mobiles will move from 'nil' rate to a moderate 2.5 per cent," she informed.

However, inputs or raw material for manufacture of specified parts like back cover, side keys etc. of cellular mobile phone has been increased from 'nil' to 10 per cent.

Inputs or parts of Printed Circuit Board Assembly (PCBA) of charger or adapter of cellular mobile phones are up from 'nil' to 10 per cent while the custom duty on inputs or parts of moulded plastic of charger or adapter of cellular mobile phones has also been increased from 'nil' to 10 per cent.

The 2.5 per cent duty hike is applicable on inputs or parts for manufacture of PCBA of cellular mobile phones, inputs or parts for manufacture of camera module, manufacture of connectors and raw material, etc.

The new custom duty slabs for chargers and parts of mobile phones are applicable from February 2.

According to Tarun Pathak, associate director at Counterpoint Research, there is a focus on electronics manufacturing and increase in duty for certain sub components is a push to localise some of these components.

"This might increase in prices for short term, or a very modest increase, as bulk of these sub components have already local suppliers like for camera modules, PCBAs, chargers and connectors, etc," Pathak told IANS.

"We predict that 3-4 per cent hike in the prices of mobile phones is possible," Pathak added.

The Centre has already rolled out a production linked incentive (PLI) scheme for the electronics manufacturing sector, particularly for mobile phone manufacturing, to curb increasing imports.

Mike Chen, General Manager, TCL India, told IANS that India needs to ease up the duty imposed on raw materials keeping in mind the 'make in India' initiative.

"We should also get added incentives so that transformative measures can be taken. The industry contributes 25 per cent of the country's GDP," Chen said.

--IANS

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