India has increased its import tax on handsets to 15% providing local companies with a much-needed boost in the market. The growing import percentage of goods has become a matter of concern to the Government. The Government has increased the import duty on a variety of other products as well. The move will boost local manufacturing capability and force foreign companies to focus more on the local manufacturing.
Many in the business fraternity has welcomed the move saying it will help the local manufacturers to increase their market share. The reduced tax collection from the GST is also one of the reasons for the move, as suggested by many. Overall, Indian companies are bound to benefit from this policy initiative and it creates balance in the Indian import ratio.
Apple & India
Apple which only assembles a particular model in India is going to be hurt by the decision and phones are bound to become costlier in the Indian market. samsung is safe since it assembles nearly all of its mobile phones in India. Apple had applied for special incentives from the Indian government for its market expansion in the Indian smartphone market. Recently, India has been flooded with the international brands such as vivo and Oppo, who have ferociously tried to capture the growing Indian smartphone market.
They have gained significant market share leaving behind the local manufacturers. Apple is a global brand having a cult following all over the world for its sleek design and high cost. India had rejected the offer by Apple to sell its refurbished iPhones in the Indian market. Apple CEO Tim Cook even had a personal meeting with the prime minister of India regarding this issue. The other goods on whose import duty have been raised include a microwave oven and TV.
This move by the government is also seen as their boost to the Make in India programme. Also, it is a pre-budget boost to the economy, as some report suggests. The new rates of the iPhone X could be around Rs 92000 which is currently at Rs 89000. The Prices for TV would also increase. With Bigger screen price will increase accordingly and same goes for the Oven.
The Future of Import
Some companies might not increase their price to grow their consumer base while many would pass this hike to the customers. The exact cost of Import is $ 42 Billion of items such as telecom instruments, computer hardware and consumer electronics. Many another category of goods saw import duty increase of 20 % and the list includes Items such as Electricity meter lamp and light fittings, set up the box and LED Lamps.
Companies such as Apple will be bound to manufacture in India or increase their prices because they import 88 % of their phones in India. Local industry is happy over the decision while other companies which were heavily dependent on imports will have to look for alternatives. Given the current feature phone market in India, we are bound to see price fluctuation in the market.