India recently become the second largest mobile phone manufacturing country in the world and to further strengthen country’s position vis a vis mobile manufacturer government has imposed a 10 percent basic customs duty on imports of key smartphone components, including populated printed circuit boards (PCBs). Populated PCBs account for roughly half of a typical smartphone’s cost.
Similar duty has also been imposed on the imports of camera modules for phones and connectors. These taxes are part of the phased manufacturing programme (PMP), a plan unveiled in 2016 to step up local value addition every year in mobile phone manufacturing.
Make in India program of India envisions to make India into a manufacturing powerhouse like neighbouring China. And for that government is promoting mobile phone manufacturing in India and gradually pushing for higher value addition in a phased manner. It has gradually raised import taxes on low-value components such as batteries, chargers and earphones, pushing Indian firms to assemble them.
Minister of State for Finance Shiv Pratap Shukla today tabled notification documents in this regard in the Lok Sabha which seeks to withdraw exemption from basic customs duty (BCD) on printed circuit board assembly, camera module and connectors of cellular mobile phones and impose 10 percent BCD on them.
At present there is zero import duty imposed on the three components. In another notification, the revenue department has increased the basic import duty on populated, loaded or stuffed printed circuit boards, related to telephones (including mobile phones) from nil to 10 percent.
India is now the second largest mobile phone manufacturing country in the world after China, as per information shared by the Indian Cellular Association (ICA). According to data shared by the ICA, India accounted for 11 percent of global mobile production in 2017 compared to 3 percent in 2014.
India replaced Vietnam to become the second largest producer of mobile phones in 2017. With the rise in mobile phone production, imports of the devices in the country also reduced to less than half in 2017-18.