India slashes cell phone shipment tax to 15 percent
Date
7/24/2024 8:23:31 AM
(MENAFN) India has recently announced a significant reduction in customs duties on mobile phones and essential components, slashing the tax rate from 20percent to 15percent. This move, unveiled during the presentation of the annual budget by Finance Minister Nirmala Sitharaman, is aimed at stimulating consumer demand and fostering local production in the mobile phone sector.
One of the primary beneficiaries of this tax cut is expected to be Apple Inc., which continues to import a portion of its high-end smartphones into the Indian market. Presently, approximately 10-12percent of iPhones sold in India are imported. Analysts, including Neil Shah from Counterpoint Research, estimate that the five percentage point reduction in import duties could lead to annual savings of between $35 million to $50 million for Apple.
Despite increasing local production with partners such as Foxconn and Tata Group, Apple still imports models like the Pro and Pro Max iPhone variants into India due to certain components being sourced internationally. The lowered import duties specifically target mobile phones, printed circuit board assemblies (PCBAs), and mobile chargers, aiming to bolster local manufacturing capabilities and attract new market entrants.
Neil Shah notes that Apple stands to benefit significantly from this policy adjustment, particularly for models where key components like PCBAs are imported. This strategic move is expected to not only support Apple’s cost efficiencies but also reduce barriers for new competitors entering the Indian smartphone market.
While Apple is set to see substantial advantages from the revised import duties, other manufacturers like Samsung will also experience benefits, although to a lesser extent. This is because a significant portion of Samsung's smartphone range is already manufactured domestically in India, according to sources familiar with the matter.
As of now, neither Apple nor Samsung has provided immediate comments regarding the implications of the reduced import duties. It's important to note that despite the potential savings and strategic adjustments, Apple currently holds a modest six percent share in the competitive Indian smartphone market, as reported by Counterpoint.
The move to lower import duties on mobile phones and components underscores India's commitment to bolstering domestic manufacturing capabilities while potentially reshaping the competitive landscape of the smartphone industry in the country. This policy shift aligns with broader efforts to enhance local production under India's economic agenda, aiming for self-reliance and reducing dependency on imports in critical sectors like telecommunications and technology.
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