Union Budget 2017-18: Smartphone prices will increase, 2% duty on import of PCBs and key components

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By DT News Desk

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Finance Minister Arun Jaitley tabled the Union Budget 2017-18 in Parliament today. While the majority of announcements revolving around digitization of the economy, the minister also announced a few initiatives to promote Make in India. In a bid to push local manufacturing in the country, the government in its budget for the 2017-18 fiscal year has proposed a two percent special additional duty on import of PCBs, the key components of the mobile phones.

The government is aiming at companies locally manufacturing the PCBs and provide โ€œadequate protection to domestic industry.โ€ Though the move is likely to result in a marginal increase in the price of handsets, as these components are mostly imported. It is worth noting that PCBs alone contribute to 25-30 percent of the cost of the smartphones.
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โ€œThe governmentโ€™s move on imposing a two percent special additional duty on populated printed circuit boards (PCB) used for mobile phones imported into the country, will provide adequate protection to the domestic industry and give the necessary impetus to Make-in-India under the GST regime,โ€ said Mr. Manish Sharma, President & CEO, Panasonic India & South Asia, and Executive Officer, Panasonic Corporation.

According to analysts, the impact of the additional duty will be marginal with prices shooting by mere one percent. โ€œThe government now wants the smartphone companies to locally manufacture the components rather import from countries like China. The additional duty will also help the local component players and is likely to boost the local manufacturing ecosystem,โ€ said Parv Sharma, an analyst at Counterpoint.

Among other efforts to promote local manufacturing in India, the government has announced an increase in budget allocation of schemes like mSIPS and EDFs to Rs 745 crores in 2017-18.

โ€œThe government has also acknowledged the need to bring down lending rates to ensure cheaper funds for both industry as well as consumers and we hope GST will be able to address that. It is heartening is that the government has announced multiple measures which can improve local manufacturing and create a better component ecosystem for mobile handset makers. The allocation of Rs 745 crore is a welcome move which will provide impetus to local component manufacturing in the electronics sector,โ€ commented Rajesh Agarwal, Co-Founder, Micromax Informatics.

Written with Inputs from BGR

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