Skip to main content

Duty abolition on mobile components to impact local manufacturing

By
Reduction of import duty on various mobile handset components may hurt local manufacturing. While lower import duties may reduce handset prices by up to ten per cent, it may discourage manufacturers to procure such components locally.
Budget 2016-17 had increased import duties on various components like printed circuit board (PCB), battery, charger and earphones. The move was aimed at discouraging imports. On May 5, department of revenue under Ministry of Finance withdrew some part of the import duty. Currently, import duty on speakers, chargers/adaptors, battery and earphones stands at 12.5 per cent, compared with 29.44 per cent announced in the Budget.
Sources say manufacturers have been lobbying for abolition of the duty since March. Since most companies are not prepared to set up component manufacturing facilities in India, they had asked the government to reduce import duties.
However, industry sources say, abolition of the two per cent import duty that was imposed during the Budget, will hurt 'Make in India'. "Components such as PCB are core of a device. Thus, local manufacturing of such products increases the level of value addition, which can't be matched by importing such parts and assembling them here," an industry executive said.
According to industry estimates, local assembly of smartphones costs four to five per cent less than the imports. "Apart from reduction in foreign exchange outflow, a manufacturing ecosystem will help in creating more jobs", he said.
India is the second largest smartphones market with 104 million handsets sold annually. It is estimated to become a 140-million units market. Total mobile phone sales could touch 250 million by 2016-end, according to analyst firm CyberMedia Research.
According to Syed Tajuddin, chief executive, Coolpad India, manufacturing of basic components in India is still two years away. "Industry had requested the government after the Budget, seeking relief from higher duties. They took about three months to decide. For companies which are now assembling handsets in India, higher import duties on components was putting pressure on the profit margins," he said.
However, duty cut may not last long. "The government may increase import duties next year. This was to give companies some time to prepare for local production (of components)," Sudhin Mathur, director, smartphones, Lenovo India said.
Business Standard New Delhi,18th May 2016

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more