The Government of India announced the Union Budget 2021 yesterday. It removed the exemption on smartphone peripherals and instead introduced tariffs on them. Thus the Indian smartphone market is set to witness a price hike in the coming months.
The new budget increases the customs duty on mobile parts and chargers from 0 to 2.5 percent which will have to be paid by smartphone manufacturers. Smartphone accessories and power banks are also expected to see an increase in prices. The new rates will come into effect from April 1st, 2021.
Smartphones to become expensive from April 1st
The new custom rates will be applicable on the manufacture of specific parts of mobile phones. These include Printed Circuit Board Assembly (PCBA), camera modules, batteries and connectors. Previously, these parts were exempted from customs payments. The customs duty rate on the PCBA of chargers or adapters has also been increased from 10 percent to 15 percent.
Commenting on the matter, Finance Minister Nirmala Sitharaman said “Domestic electronic manufacturing has grown rapidly. We are now exporting items like mobiles and chargers. For greater domestic value addition, we are withdrawing a few exemptions on parts of chargers and sub-parts of mobiles. Further, some parts of mobiles will move from ‘nil’ rate to a moderate 2.5 percent”.
While smartphones are manufactured in India, they are actually an assembly plant for peripherals. Sitharaman added that the increase in customs duty is to promote local manufacturing. The final price of the finished product will increase and customers will have to bear the additional cost.
Meanwhile, consumer electronics goods such as refrigerator and air conditioner will also get more expensive as custom duties on parts like the compressor has been hiked to 15 percent from the previous 12.5 percent.