Made in India smartphones to get cheaper, thanks to GST

'Make in India' will get a push with the government's latest move to impose a 10 per cent basic customs duty on mobile phones imported into the country.

The levy is also applicable on parts like chargers, headsets, battery and USB cable, with immediate effect.

"The duty differential earlier was about 11.5 per cent in favour of local manufacturing. But with GST subsuming SAD and countervailing duties, that benefit was taken away. The 10 per cent customs duty will help push local manufacturing once again," Intex Chief Financial Officer and Director, Rajeev Jain told PTI.

With this, status quo will be maintained (in favour of domestic manufacturing), he added.

The announcement on the duty came in simultaneously with the midnight roll-out of Goods and Services Tax (GST) on the intervening night of June 30 and July 1.

Many phone makers, who assemble their devices at facilities in the country, also import small quantities of phones from countries like China.

"The (import) quantities, at least for us, is very small and therefore, the customs duty will not make much difference. For the end-customer, there is no impact as he/she pays 12 per cent GST for the handset," Jain explained.

The government , however, has kept certain parts like printed circuit board assembly (PCBA), camera module, touch panel, cover glass assembly, vibrator motor and ringer, out of the levy of basic customs duty.

Echoing a similar view, BMR Advisors Partner, Mahesh Jaising said till yesterday, companies importing handsets were of the view they would have benefited under GST, given the manufacturing duty differential scheme going away.

"Consequently, consumers were expecting (prices of) imported phones (typically the high end phones which are usually imported) to have come down. However, with the 10 per cent customs duty last night, the tax structure is again in favour of local manufacturing," he added.

Incidentally, telephone bills of consumers will go up under GST regime, while prepaid customers are getting lesser talktime than before. This is because, under GST, telecom services are being taxed at 18 per cent compared to 15 per cent, earlier. Users are now getting talktime of about Rs 80 on a recharge of Rs 100, compared to about Rs 83 earlier.

Similarly, costs for postpaid users will also go up to the extent of three percentage points, starting this month. So, for a monthly usage of Rs 1,000, users will have to pay Rs 1,180 instead of Rs 1,150 earlier.

With the GST rolling out at midnight, some consumers faced issues getting recharges in early hours today. Some retailers complained of slow recharge processing initially but these issues seemed to be ironed out as the day progressed.