Proposed Customs Duty Hike May Hit 100 Smartphone-Making Units

The India Cellular Electronic Association has written to the PMO seeking the deferment of the customs duty hike.

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Out of the 127 mobile phone assembly units in India, 100 could be shut down if the government goes ahead with its plans to increase the customs duty on certain mobile phone components. This might prompt the industry to seek a deferment of the hike, The Economic Times reported.

The India Cellular Electronic Association (ICEA) has even written to the Prime Minister's Office (PMO) seeking the deferment of the customs duty hike to 2020.

The hike is scheduled to be imposed on the import of LCD assembly, vibrator motor and touch panel later this year under the Phased Manufacturing Plan (PMP). 

The hiked duty on these parts will be 12.5 percent countervailing duty (CVD) on imports and excise duty of one percent without input tax credit.

"There is a deep distress in the industry, especially the Indian mobile manufacturing ecosystem which holds more than 100 of the 127 factories and it will not be prudent to loan an extra cost on the ecosystem," ICEA President Pankaj Mohindroo had written in a December 2018 letter to Nripendra Misra, the principal secretary to the prime minister, the report said.

The PMP is an important part of Make in India that hopes to make India a global manufacturing hub by 2025.

It was said that the main reason for PMP was to deter import of more and more components in the country with each passing year, making manufacturing within the country a more attractive option to go with.

However, the hiked products have failed to attract manufacturers in the country, further raising the price of imports.

In fact, a senior industry representative told ET that even if the customs duty on LCD assembly is increased this year, it would still be cheaper to import a handset rather than assemble it in the country.

(With inputs from The Economic Times.)