Free Press Journal

customs duty on cell phones hiked to 15%


Move will hurt iPhone maker Apple the most

New Delhi : The Indian government has increased the customs duty on various items including on mobile phones, a Finance Ministry notification said late on Thursday, and the move will hurt US-based Apple Inc. the most. The notification issued by the Department of Revenue, under the Finance Ministry, said the customs duty for mobile handsets will go up from 10 per cent at present to 15 per cent.

Pankaj Mohindroo, Founder and National President of the Indian Cellular Association, told IANS: “Indian mobile phone industry is marching towards global competitiveness. It does not seek long-term protection. Short term disability mitigation is however necessary. The recent spurt in imports esp feature phones (after PMP 1/7/2017 notifications) is responsible for this duty increase. We will see a revival in feature phone manufacturing to pre-July 2017 levels soon. Calls to increase duty to 40 per cent bound rates are however unwarranted. I am sure that [the ]Government of India will do a careful impact analysis after this hike and take a suitable call around budget time,” he added.

However, according to industry experts, smartphone players that are import-dependent like Apple and  China’s Lenovo will bear the maximum brunt of this decision. “Apple will be hit the most as the company imports nearly 88 per cent of its devices into the country. It will either have to increase the price or start assembling more in the country,” Tarun Pathak, Associate Director, Mobile Devices and Ecosystems, Counterpoint Research, told IANS.

Currently, the technology giant is assembling its iPhone SE model at its Bengaluru facility, with Wistron Corporation, its Taiwanese manufacturing partner. “Domestic and some China-based manufacturers will not be affected as most of them are assembling a lot in the country, including South Korean giant Samsung. They just need to speed up their assembly lines,” Pathak added.

Apple is also seeking a tax relief and other incentives from the government to begin assembling more handsets in the country.

“Assembling in India becomes critical since this will give savings to Apple which can partly be used to bring down prices and part of it can be used for expanding distribution, channel margins, retail marketing spends and ensure placement in smaller towns and cities where the consumer is highly aspirational and strives for a premium brand like Apple,” Navkendar Singh, a Senior Research Manager at IDC India, told IANS earlier.

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