New Delhi: Indian smartphone makers such as Lava<\/a> and Micromax<\/a> are likely to be the most affected by the increase in basic customs duty<\/a> (BCD) on import of mobile phone sub-parts as the move will mostly impact the sub-Rs 10,000 category, as per industry executives and analysts.
They say the levy of duty will add cost pressure on brands competing in the sub-Rs 10,000 category, but market leaders such as Xiaomi<\/a>—which dominates the segment—will be able to absorb the cost, which can be offset with the kind of volumes they sell.
The government has proposed that with effect from April 1, BCD on import of printed circuit board assembly (PCBA), camera modules and connectors should be raised to 2.5%. For PCBA and moulded plastic for manufacture of charger or adapter, duty should go up from the existing 10% to 15%. Whereas, other inputs and parts of chargers will attract 10% duty, from nil earlier.
An industry executive said featurephones and entry-level smartphones will be worst impacted where it is difficult to manage the bill of materials.
“This will adversely affect a brand like Lava... we are already battling the blow of 10% hike in duty on display assembly, which came in October 2020 amid severe global component shortage,” he said.
But the budgetary allocation of Rs 50,000 crore in strengthening local R&D on priority sectors will aid Indian players like Lava to take on global competition, he added
Lava and Micromax did not respond to ET's emailed queries.
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