Govt reverses import duties on key mobile parts

The Dollar Business Bureau

The Central Board of Excise and Customs (CBEC) on Friday reversed the import duty structure on certain mobile phone components such as batteries, chargers and headsets to 12.5 percent.

Earlier, in his Union Budget speech 2016, the Finance Minister had withdrawn the exemption from basic customs duty, CV duty, SAD on charger/adapter, battery and wired headsets/speakers for manufacture of mobile phone.

These mobile components accounts for almost 15-20 percent of the total cost of a mid-size mobile phone.

The Indian mobile industry has hailed the government’s decision, saying the amendment in the duty structure would encourage affordable mobile phones in the world’s second largest mobile market.

Josh Foulger, Country Head and Managing Director, Foxconn, said that the quick course correction after the Budget by the government will build the ecosystem for mass production of mobile phones as well as their parts in a stable way.

The latest decision comes against the backdrop of the industry’s resentment after Finance Minister Arun Jaitely, in his Budget 2016 speech, had announced a different duty structure on certain mobile parts.

With the new duty scheme, key mobile parts such as batteries, chargers and headsets were levied with over 29.44 percent duty as compared to 12.50 percent on complete mobile phones.

The Finance Minister had, however, reduced or withdrawn duties on components required for manufacturing of the three parts.

“The structure of customs and excise duty plays a vital role in incentivising domestic value addition towards ‘Make in India’ campaign of our government,” Jaitley had said in his budget speech.

Jaitely, in a reply to Parliament on May 5, made the announcement of bringing back duty rate for the three mobile parts to 12.5 percent, at a level with that for mobiles.

The government has also done away with the special additional duty of 2 percent levied on populated printed circuit board for manufacturing mobile phones.