As part of the newly announced union budget 2021, the government has proposed higher import duties on phone sub-parts (like printed circuit board assembly (PCBA), camera modules, connectors), and chargers. This is aimed at encouraging local “value addition”.
“For greater domestic value addition, we are withdrawing a few exemptions on part of chargers and sub-parts of mobiles. Further, some parts of mobile rate will move from nil rate to moderate 2.5 per cent,” said Finance Minister Nirmala Sitharaman while presenting the new change.
This 2.5% basics custom duty on imports of the aforementioned sub-parts will go into effect on April 1, 2021.
Coming to chargers, PCBA and molded plastic used in their making will see a hike in taxes from the current 10% to 15%. Meanwhile, some other charges are — a 10% duty on other charger components, a 15-20% charge on completely built-up units (CBUs), 22.5% on handsets, and 10% on display panels, printed circuit boards, mechanics, and die-cut parts.
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So, in total, about 50% bill value of a smartphone will be liable for customs duty with this new budget move.
Ms. Sitharaman points twin objectives of this customs duty policy viz. boosting indigenous manufacturing and bolstering India’s exports and position in the global value chain. “The thrust now has to be on easy access to raw materials and exports of value addition,” she added.