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Featurphone prices to increase after PCBA duty hike

The government announced a 20% customs duty on PCBA which currently attracts a 10% customs duty, thus encouraging local production of the same. PCBs make up about 50% of the cost of making a phone. Currently, close to 300 million units of PCBA are used annually in the country out of which 160 million are used in smartphones, according to ICEA.

Last Updated: Feb 01, 2020, 11.38 PM IST
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However, once the existing local manufacturing units begin producing these PCBAs, the price is expected to fall.
New Delhi: Featurephone prices are set to increase. The government on Saturday proposed to double to 20% the basic customs duty on printed circuit board assembly (PCBA), used for making mobile phones.

Currently, close to 300 million units of PCBA —making up a bulk of the cost of making a handset — are used annually in the country. Of this, only 160 million are manufactured locally, and used in smartphones, said the India Cellular & Electronics Association (ICEA).

Industry experts point out that the balance PCBAs — used in featurephones — are imported and will attract the increased duty.

This would raise the price of the basic phones until domestic units begin producing the component.

There are over 400 million featurephone users in India.

In terms of value, India manufactures about Rs 1 lakh crore of PCBAs and imports units worth Rs 6,000 crore.

Import of display assembly and touch panels used for mobile handsets, which were part of the Phased Manufacturing Plan (PMP) for 2019-20, will attract 10% duty from October.

Import of fingerprint sensors for handset manufacturing will attract duty of 15% from February.

“We will be ready by October, which is when display and touch panels will attract the increased duty, so there won’t be any impact on prices of devices and, thus, on consumers,” Pankaj Mohindroo, chairman, ICEA, told ET.

The industry also welcomed the move to crack down on misuse of free trade agreements with Asean countries, such as Vietnam.

“Introduction of Section 28DA in the Customs Act could lead to suspension of preferential tariff treatment in cases where importers are not fulfilling the obligation imposed on them, and also where time-bound verification from the importing country is not forthcoming,” ICEA said.
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