Budget 2017: Mobile phones may get more expensive

Budget 2017 will introduce special additional duty (SAD) on populated printed circuit boards (PCBs) of mobile phones. This addition of 1-2 percent will mean mobile phone prices may see a spike.

PCBs are known to be the heart of a mobile phone and account to nearly half of the manufacturing cost. So far, SAD was nil. Now, the question is will phone makers absorb the cost or will it be passed down to consumers? In the initial phase, the cost will be passed on to consumers as it is difficult to absorb this cost fully," Panasonic President and CEO (India and South Asia) Manish Sharma told PTI.

However, some may even choose to cut down the cost on components, in order to nullify the cost. It should be noted that most of the components that are fitted onto the circuit board are still imported.

Jaitley said that the move aims to focus on creating an ecosystem to make India a global hub for electronics manufacturing. The duty is believed to only further boost manufacturing parts here. The tax levied could also make phones coming from China dearer. However, this move is also accompanied by increased allocation for M-SIPS scheme.

More than 250 proposals envisaging investment of Rs 1.26 lakh crore for electronics manufacturing have been received in the past two years. “A number of global leaders and mobile manufacturers have set up production facilities in India. I have therefore exponentially increased the allocation for incentive schemes like M-SIPS and EDF to Rs 745 crore in 2017-18. This is an all-time high,” he added.
 

However, this may not be enough to push manufacturing, and there is the need for additional, phased out initiatives and incentives. But there is no denying that it could prove to be a stepping stone towards manufacturing in India. It will only push to reduce our dependence on imported components.

• Budget 2017
• Mobile phones
• Phone prices