Budget 2015: Phones and Tablets Made in India will get cheaper

Giving a boost to PM Narendra Modi's pet Make In India program, the Budget 2015 provides a slew of benefits for Original Equipment Manufacturers who manufacture in the country. Custom duty has been reduced on 22 items, including mobiles and tablets being made in India.

Though the fine text is yet to emerge, mobile phones made in India are going to get 11.5 per cent duty advantage, while tablets made in the country will get 10.5 per cent duty advantage.

The overall budget, believe analysts, bodes well for Making in India. LED TV's and other LED electric equipment are also set to get benefits if manufactured in India.

Presenting the Budget 2015-16 in Parliament, Finance Minister Arun Jaitley said: "I propose to reduce the rates of basic customs duty on certain inputs, raw materials, intermediates and components (in all 22 items) so as to minimize the impact of duty inversion and reduce the manufacturing cost in several sectors." The role of indirect taxes is very important in the context of promotion of domestic manufacturing and "Make in India", he said.

Some other changes address the problem of CENVAT credit accumulation due to the levy of SAD, he added. "I propose to fully exempt all goods, except populated printed circuit boards for use in manufacture of ITA bound items from SAD and reduce the SAD on imports of certain other inputs and raw materials subject to actual user condition," Jaitley said.

The government has proposed to impose basic customs duty at 10 percent on specified telecom products that are outside the purview of the Information Technology Agreement (ITA). It will also exempt all inputs/components used in the manufacture of personal computers (PCs) from 4 per cent special additional duty (SAD and has proposed to impose an education cess on imported electronic products to provide parity between domestically produced goods and imported goods.

Jaitley also proposed to exempt 4 per cent SAD on PVC sheet and ribbon used for the manufacture of smart cards. However, it is bad news for OEM's importing their devices to India. "Excise duty structure for mobile handsets including cellular phones is being changed from 1% without Cenvat credit or 6% with Cenvat credit to 1% without Cenvat credit or 12.5% with Cenvat credit. NCCD of 1% on mobile handsets including cellular phones remains unchanged," said the fine print of the Union Budget, which was presented by finance minister Arun Jaitley on Saturday.

Analysts said that the announcement implied an increase of cost of about 4-5% for handset makers who import handsets into India, which would in all likelihood be passed on to consumers.

A slew of mobile manufacturers including Xiaomi and Lava have shown interest in manufacturing in India.