Indian mobile handset industry wants ecosystem for domestic manufacturing, exports

The mobile handset industry has seen a gradual movement towards higher priced smartphones, pushing up average selling price (ASP) to Rs 17,800, from Rs 14,600 a year ago. And more of an upward movement is expected this year too.

India, the world’s second-largest handset market, is dominated by Chinese players such as Xiaomi, Vivo, Oppo & Realme, along with Samsung. There is scope for more as it still has some 350-400 million feature phone users who can be upgraded to smartphones.

The local mobile phone assembly has picked up significantly, backed by the government’s production-linked incentive (PLI) scheme —with Apple and Samsung leading the fray. The industry wants an ecosystem to push exports and support the resurrection of home-bred brands.

Budget recommendations

1.  Enhanced credit: guarantee of Rs 1,000 cr for domestic companies that have applied for PLI
2.  GST on mobile phones should be lowered to 12% from 18%
3.  20% custom duty on high-end phones may be continued, but maximum pegged at Rs 4,000 per device
4.  More PLI schemes to boost fabs, wearables, PCBA* manufacturing
5.  Rationalisation of tariffs to build a competitive export oriented ecosystem

IMPACT OF DUTIES ON COMPONENTS

• Charger: High duties have pushed charger sector into degrowth
• PCBA: 2.5% duty on some parts of PCBA manufacturing is unsettling
• Power banks: Withdrawal of concessional duty of 5% on lithium-ion cell, used to make power bank, will be detrimental
• True wireless stereo: Duty hike will kill the sunrise sector, up overall prices of manufacturing

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