Smartphone makers win 'Make-in-India' case

Smartphone makers win
Highlights

The government has withdrawn a notification that imposed duties on key mobile handset components such as LCD displays, touch panels and vibrator motors According to the notice, LCD display assemblies, vibrator motors and touch panels were planned to attract 125 countervailing duty CVD and 1 excise duty without the input tax credit The duties are slated to come into effect from February 1

HIGHLIGHTS

  • The government withdrew imposed duties on key mobile handset components
  • Move to help companies that have set up plants in India
  • The move will increase the cost of locally-made mobile phones

The government has withdrawn a notification that imposed duties on key mobile handset components such as LCD displays, touch panels and vibrator motors. According to the notice, LCD display assemblies, vibrator motors and touch panels were planned to attract 12.5% countervailing duty (CVD) and 1% excise duty without the input tax credit. The duties are slated to come into effect from February 1.

The move will help companies that have set up plants in India

The notification is a huge relief to smartphone makers such as Samsung, Vivo and others who have set up plants in India. It will give them more time to get in place an ecosystem for locally manufacturing such components.

The move will increase the cost of locally-made mobile phones

The move would have increased the cost of locally-made smartphones, making it difficult for companies to continue with their India manufacturing plans. In fact, Samsung had informed the government that it will have to stop local production of flagship models Galaxy S9 and Note 9 if February deadline is not extended.

Expect more 'Made in India’ smartphones

The move is likely to boost the number of 'Made in India' smartphones as it gives handset makers longer window to create an ecosystem for component manufacturing.

Good news for iPhone admirers

The notification is also good news for both Apple fans and the company as the duties were making the Apple devices more expensive in India.

Smartphone manufacturers claim that the new deadline will give them enough time to set the ecosystem needed to manufacture these components. The new duties threatened to disrupt plans of handset makers assembling phones in India. The notification would have increased the cost for smartphone makers as display panel accounts for 25-30% of a handset's production cost. The companies had told the government that the move may put about 100 plants out of work. Phased Manufacturing Programme (PMP) was launched in FY17 with the aim to promote indigenous manufacturing of cellular handsets and their components to substantially increase value addition within the country.

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