Budget 2017: Here’s where mobile phone prices are heading

The price of mobile phones is likely go up next fiscal with the Budget 2017-18 bringing in a Special Additional Duty (SAD) of two per cent on PCBs or Printed Circuit Boards used in the manufacture of mobile phones. Till now SAD was zero, but the new two per cent duty will be imposed on all imported PCBs.

Since PCBs account for nearly 40-50 % of the mobile phone’s value, an increased duty on these components will result in a price rise. It is expected that one per cent value impact on the price of the mobile, but obviously this is not going to happen overnight. While one per cent might not seem much, if you take into consideration the number of mobile phones being manufactured and sold in India, this duty will translate into a bigger cost for the company.

The PCB is the main constituent in mobile phones as well as other electronic devices. This duty is to boost manufacturing of the parts in India, and these are baby steps that are being taken. However, tax incentives alone won’t result in manufacturing in India.

The government has taken other steps that will eventually boost component manufacturing in India. They have increased allocation for M-SIPS scheme, and are looking at other incentives as well.

Of course, the cost of manufacturing mobiles will go up for companies in India. Now whether they pass this onto consumers or not, will depend on vendor-to-vendor.

The government has been trying to provide tax incentives to boost manufacturing in India, and the eventual aim is to have an entire ecosystem of components here. According to us, the government’s idea is to create real manufacturing in India as India is focusing on manufacturing i.e. Make In India Campaign . Currently what is happening here is mere assembly of kits. Eventually, we need a proper manufacturing of parts here, not just PCBs, but also display, battery, semi-conductor and other components.

But not all are convinced this two per cent duty will result in a hike.  “There has been a 2% increase in duties levied on import of PCBA in India, which still will reflect only on one part of the manufacturing cycle with focus on assembly of mobile handsets. On the other hand, providing attractive incentives for localization of design and R&D capabilities would have bolstered the ‘Make in India’ initiative, and driven more handset makers to introduce design led manufacturing in India.