The Centre announced the Budget 2021 recently. Finance Minister Nirmala Sitharaman announced the removal of a few exemptions on parts and sub-parts of mobile chargers and mobile phones. The budget 2021 on smartphones in India will focus on promoting domestic smartphone manufacturing.
Budget 2021 on smartphones in India shows an increase on custom duty on some parts of the handsets to 2.5 percent from 0. Analysts suggest that the upsurge will be a modest one and for a very short term as the “bulk of these sub-components already have local suppliers.” Presenting the Budget 20201, Sitharaman said, “Domestic manufacturing has grown rapidly, we are now exporting items like mobiles and chargers. For greater domestic value addition, we are withdrawing a few exemptions on parts of chargers, and sub-parts of mobiles. Further, some parts of mobiles will move from ‘nil’ grade to a moderate 2.5 percent.”
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It has been derived that certain mobile phone parts, including Printed Circuit Board Assembly (PCBA), Camera Module, and Connectors will see a withdrawal of exemption from custom duty and a moderate 2.5 percent tax will be levied, instead of the ‘nil’ rate offered earlier. Likewise, it is also expected that parts and sub-parts for manufacturing the battery and the battery pack might experience similar tax rate being levied. The Union intends to apply the new rates starting April 1, 2021. There is a focus on electronics manufacturing and increase in duty for certain sub-components is a push to localise some of these components. This might increase prices for term short term or see a very modest increase as bulk of these sub-components already have local suppliers like for Camera modules, PCBAs, chargers, connectors etc.
The new budget 2021 on smartphone also includes increase in the rates on import of PCBA and moulded plastic for manufacture of charger or adapter from 10 percent to 15 percent. Also, all the other parts mandatory for assembling a mobile charger will see a custom duty levied of about 10 percent. The new rates will be applicable starting February 2.
What does budget 2021 on smartphones indicate?
We can be certain that, in the coming few months, we can see a hike in the prices of smartphones and mobile chargers. However, companies can control the costs by switching over to locally manufactured components. This will also help them mitigate the increased duties.
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