On July 1, one of the biggest tax reforms since Independence took place in India with the implementation of Good & Services Tax (GST). GST was set to level the advantage of local smartphone manufacturers like Foxconn and Samsung by making imported smartphones cheap. But the government has now levied a basic customs duty of 10% to once again provide the edge to these companies as well as local players.
This decision is set to be a big boost to the Make in India program with smartphone manufacturing a key element of the program. The move will also be a green light signal for huge investments waiting for the government policy to provide protective support to mobile phone manufacturing in India. Samsung has already pledged investments to the tune of Rs. 5000 crore to double manufacturing in India by 2020.
The government added, in a press release issued in early hours of July 1, that 10% BCD had been imposed on “Cellular mobile phones and specified parts of cellular mobile phones like charger, battery, wire headset, Microphone and Receiver, Key Pad, USB Cable etc.”
Some parts of smartphones have been excused from the 10% duty like printed circuit board assembly, camera modules, connectors, display assembly, touch panel and ringer. Also, parts that will be used in local manufacturing have also been excluded from the duty.
With the new 10% duty, local production of 500 million units by 2019 will become a reality, said an industry expert. According to Counterpoint Research, as much as 80% devices sold in Q1 2017 were made in India.
