This increase of 5% in custom duty will particularly hurt the companies who haven’t started manufacturing smartphones in India. For instance, Apple has just started manufacturing the iPhone SE in India, but everything else is imported from China. The Indian government had increased the custom duty from 10% to 15% just a couple of months back, after which Apple had increased the prices of iPhones. According to Tarun Pathak from Counterpoint Research, 3/5th of total 300 Million handsets were assembled in India last year. This increase in custom duty will force smartphone OEMs like Apple to start manufacturing/assembling more models in India, especially now since India is one of the fastest growing markets even in the premium segment. Chinese players like Xiaomi, OnePlus, and Oppo have already manufacturing most of their smartphones in India and will be in a better position to counter the hike in custom duty. Interestingly, those who simply bring the components here and assemble to gain the advantage of the duty difference will also hurt as the Indian government has increased the custom duty of some key components like printed circuit boards (PCBs), camera modules and connectors to 15%. This seems like a concentrated push to get the OEMs to manufacture the whole supply chain in the country instead of simply assembling the last level. We can expect the prices of smartphones to increase in short-term to accommodate this increase in custom duty. Commenting on the budget, HMD Global’s VP in India, Mr Ajey Mehta said: But Mr Syed Tajuddin, CEO, Coolpad India, indicated that the changes will impact repair costs: That pretty much sums up what we can expect from the new development. Higher base price and Higher repair costs for smartphones in India.
