In what may come as a pinch of salt to the smartphone buyers, the prices of smartphones are going to increase as the government has imposed a special additional duty of 2% on printed circuit boards (PCB) that constitute 30% of phone’s manufacturing cost.
After the announcement of levying a special additional duty, the prices of products such as cigarettes, pan masala, cigar, bidis, chewing tobacco, LED lamp components, Cashew nuts (roasted and salted), Aluminum ores and concentrates, Polymer coated MS tapes used in manufacturing of optical fibres, and printed circuit board used in making mobile phones are likely to increase.
Meanwhile, booking of railway tickets online, RO membrane elements for household usage, LNG, solar tempered glass used in solar panels, wind operated energy generator, vegetable tanning extracts used in making leather products, Point of Sale (PoS) machines card, and fingerprint readers will get cheaper.
“The additional duty levied will be passed on to the consumer as India doesn’t have the capacity to manufacture PCBs from scratch,” said Naveen Aggarwal, Partner and Head – North India Tax, KPMG.
A top leader in the industry said, “But imposing a SAD on PCB which can’t be made here is definitely counter-intuitive. This means that the announcement of extra allocation under Modified Special Incentive Package Scheme (M-SIPS) and Electronic Development Fund (EDF) may not help after all.
In a move to increase more manufacturing in India, the government this time has put in place a differential duty structure under which a manufacturer will pay just a 1% duty if the phone is assembled locally and 12.5% duty if it is imported.