People take photographs on their smart phones. (Photographer: Prashanth Vishwanathan/Bloomberg)

Union Budget: Customs Duty On Mobile Phones Hiked To 20%

Finance Minister Arun Jaitley today announced a hike in customs duty on mobile phones to 20 percent from 15 percent, in a bid to boost local value addition in domestic electronics manufacturing.

Presenting the Union Budget 2018-19, Jaitley said he was making a “calibrated departure” from the usual practice of reduction in customs duties.

He said this is being done in view of the “substantial potential” for domestic value addition in sectors like food processing, electronics, auto components and footwear.

The move will lead to creation of more jobs in the country, Jaitley added.

To further intensify domestic value addition and Make in India (programme)in these sectors, I propose to increase the customs duty on certain items... I propose to increase customs duty on mobile phones to 20 percent from 15 percent and on some other parts and accessories to 15 percent.
Arun Jaitley, Union Minister of Finance

Commenting on the decision, Indian Cellular Association National President Pankaj Mohindroo told newswire PTI that this will be the “last nail in the coffin” of imports.

“We are reaching a situation where imports would be nearly impossible,” Mohindroo added.

He said since bulk of mobile phones are manufactured domestically, there will be no impact on their prices. The exception will be a few brands, that are still making phones overseas.

(Follow the blog for live updates on the Union Budget 2018-2019.)

“There will be no increase in mobile phone prices since 81 percent of the volume and 84.5 percent of value is manufactured in India and we will cross 90 percent in both terms in 2018,” he explained noting that the government seems to be determined to increase value addition in domestic manufacturing.

Customs duty on smart watches and wearables has been doubled to 20 percent, while specified parts and accessories of mobile phones have seen a duty hike to 15 percent from the current range of 7.5-10 percent.