The government seems to have been inspired by “the Lord gives and the Lord takes away” in announcing measures having a direct impact on consumers. With a cut in customs duty on several items, mobile phones, precious metals gold, silver and platinum, chargers, cancer medicines, leather goods, critical minerals, among others, are set to be cheaper. However, a 1% tax collected at source (TCS) on goods valued above Rs 10 lakh will make products such as jewellery, cars, houses, etc, expensive, even though the government has not notified the list of products attracting this tax. And while smartphones may get cheaper, an increase in customs duty on telecom equipment will increase costs for telcos, which if passed on to the consumer, will make the use of phones costlier.
“The Budget proposals for customs duties intend to support domestic manufacturing, deepen local value addition, promote export competitiveness, and simplify taxation, while keeping the interest of the general public and consumers surmount,” said finance minister Nirmala Sitharaman in her speech.
For smartphones, the basic customs duty on mobile phones, mobile printed circuit boards (PCBA) and mobile chargers has been reduced to 15% from 20%. Analysts said the move is positive for companies like Apple, which still imports many iPhone variants into the country despite increasing local production.Neil Shah of Counterpoint Research said almost 10-12% of the Apple iPhones are imported each year into India and a 5% reduction in tax on the devices will result in a $35-50 million annual benefit to Apple. However, passing of the benefits to the customers will be decided by the company.Tarun Pathak, research director at Counterpoint India, seconds this opinion. “The reduction of BCD on smartphones, chargers and PCBA will not have any major impact on the prices of smartphones. We may expect a price cut of 1-2% on an average from this move, but it depends on OEMs if they want to pass this to the consumer,” he said. However, Pankaj Mohindroo, chairman of India Cellular and Electronics Association (ICEA), was elated. “We had recommended reducing BCD on mobile phones, its PCBA and charger/adapter to 15%, which has been accepted. The mobile and electronics industry is elated with the announcements and this will go a long way to enhance manufacturing, exports and our competitiveness,” he said.Experts said the move to reduce customs duties on gold and silver to 6% from 15% and that on platinum from 15.4% to 6.4% in an effort to enhance domestic value addition in jewellery will reduce prices of gold by over Rs 5,000 per 10 gram for consumers. A similar impact will be seen on silver and platinum.
Among other things, three cancer medicines — Trastuzumab Deruxtecan, Osimertinib, and Durvalumab — have been exempted from customs duty. In more relief for the medical sector, BCD on X-ray tubes and flat panel detectors for use in medical X-ray machines has also been decreased. Similar reduction and exemption in customs duty was also announced for various leather raw materials to enhance the competitiveness of exports in the leather and textile sectors.In a bid to curb imports for PCBA telecom equipment and push domestic production, the government has increased customs duty on the product to 15% from 10%. “This will increase the cost of providing services as telcos are continuously upgrading their networks with the advent of the new technology,” said SP Kochhar, director general of Cellular Operators’ Association of India (COAI). Over the past five-six years, the government has gradually increased customs duty on telecom equipment to 20%, posing a substantial financial burden and significantly impacting the rollout of 5G services in India, Kochhar added.Peeyush Vaish, partner and TMT (technology, media and telecom) industry leader, Deloitte South Asia, said, “Rationalisation of duties on mobile phones, chargers and enhancements on PCBs is clearly focused on both consumer growth and digitisation, and at the same time boosts India manufacturing in the telecom infrastructure.”