In the Union Budget 2018 speech, the customs duty on mobile phones has been raised again from 15 percent to 20 percent.
This is a Budget 2018 announcement aimed at the local production of phones in India, therefore, be sold much more cheaply. The government first announced a duty of 10 percent in July 2017. After just half a year, that was then raised to 15 percent in December. With Budget 2018, it has been brought to 20 percent, less than two more months down the line.
As such, the Budget 2018 move is likely to increase the number of handsets being made in India - more than half already are, according to Counterpoint Research. "This is an expected move but Industry will look forward to more such announcements from components manufacturing perspective," says Tarun Pathak, Associate Director at Counterpoint Research.
"Almost three-fifth of total handsets out of 300 million last year were raised in the local assembling share as brands will ramp up their current output from EMS [Electronics Manufacturing Services] facilities since capacity already there. "
A few brands, especially in the premium space, are most likely to be affected by this decision, as Pathak points out. "This is also a good news for local EMS players which can see a greater participation and long-term engagement from OEMs perspective."
"Mobile phones companies are looking for growth market like India and this can push them towards investing more in manufacturing in India," added Satish Meena, of Forrester Research. "[It] also helps in the focus of job creation, because they will not help the Indian smartphone manufacturers because they lost the market due to lack of innovation a product quality, so things may not change a lot for them. "
"This [Budget 2018] move of duty increases can be considered as a 'step in India' initiative by the government of India," said Jaipal Singh, Senior Market Analyst for IDC India .
"Although [given that] nearly 90 percent of the smartphones are now assembled in India, it will not affect much on the overall smartphone as a category. But these calls for long-term commitment and investments from those who still depend on importing the handset in India Like Apple's point of view, it will definitely impact them in the near term as most of their devices are still imported in India. "
"In the long term, this will push all the vendors to start manufacturing the incentives and remain competitive in a market like India," Singh added.
Other big brands have taken to assembling in India. "HMD Global continues its strong emphasis on PM Modi's Make in India campaign," said Ajay Mehta, Vice President India, HMD Global. "While the import duties for mobile phones have increased to 20 percent, along with a 15 percent duty on key components, this will have a minimum impact on our business, as all our current portfolio of Nokia phones are manufactured in India." Samsung also told Gadgets 360 that all phones sold in India are manufactured locally so it will not be impacted by the decision.
Most of Xiaomi's phones are made in India as well, with the exception of Xiaomi Mi Mix 2, the company confirmed. Until now, Apple only only assembles its iPhone SE models in India and imports its other devices. However, the company could not be adding the iPhone 6s to this list, according to a new report that its supplier, Wistron, has been scouting for land in and around Bengaluru to set up a plant for the phone, which remains popular in India as it's cheaper than the newer iPhone 8 and iPhone X devices.
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