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Smartphone makers miffed over import duties

This year’s Budget has levied 29% customs duty on things that are imported by brands

Policy Pulse
Publish Date: Apr 12 2016 3:00PM | Updated Date: Apr 12 2016 3:00PM

Smartphone makers miffed over import duties

 An industry body comprising leading smartphone makers such as Samsung, Panasonic, Micromax, LG and Intex has asked the government to reduce import duties levied in this year's Budget on accessories claiming it places companies with local manufacturing facilities at a disadvantage vis-a-vis Apple and others which import and sell handsets and accessories in ready-to-sell packages.

 
This year's Budget has levied 29% customs duty on batteries, chargers, adapters, speakers and wired headsets that are imported by brands which manufacture in India. But importers of completely built units have to pay only 12.5% on the same inputs since these accessories are packaged inside the box. Accessories account for up to 40% of the cost of mobile manufacturing. 
 
As a result, the net benefit which the handset manufacturers were enjoying in India compared with importers such as Apple has contracted from 12-13% to just 5%. Market leader Samsung currently manufactures its entire portfolio in India while others like Micromax and LG too have begun local production. All of them, unlike Apple, import accessories. 
 
Several handset makers have already opposed Apple's plan to sell refurbished or pre-owned phones in India, and industry observers see these moves as the beginning of a united alliance against the iconic smartphone maker. A Samsung spokesperson said the company had not lobbied against Apple with the government.