Jaitley hikes customs duty on mobile imports, industry sees no impact on pricing

Finance minister Arun Jaitley has announced a hike in customs duty on mobile phones to 20 per cent from 15 per cent in a bid to boost local value addition in domestic electronics manufacturing.
Presenting the Union Budget 2018-19, Jaitley said that he was making a “calibrated departure” from the usual practice of reduction in customs duties.
He said that this was being done in view of the “substantial potential” for domestic value addition in sectors like food processing, electronics, auto components and footwear. The move will lead to creation of more jobs in the country, Jaitley added.
“To further intensify domestic value addition and Make in India (programme) in these sectors, I propose to increase the customs duty on certain items… I propose to increase customs duty on mobile phones to 20 per cent from 15 per cent and on some other parts and accessories to 15 per cent,” he said.
Commenting on the decision, the national president of the Indian Cellular Association Pankaj Mohindroo said that this would be the “last nail in the coffin” of imports. “We are reaching a situation where imports would be nearly impossible,” Mohindroo added.
He said that since the bulk of mobile phones are manufactured domestically, there would be no impact on their prices. The exception will be a few brands, that are still making phones overseas. “There will be no increase in mobile phone prices since 81 per cent of the volume and 84.5 per cent of value is manufactured in India and we will cross 90 per cent in both terms in 2018,” he explained, noting that the government seems to be determined to increase value addition in domestic manufacturing.
Customs duty on smart watches and wearables has been doubled to 20 per cent, while specified parts and accessories of mobile phones have seen a duty hike to 15 per cent from the current range of 7.5 to 10 per cent.