Handset industry divided over PCB customs duty hike

NEW DELHI: The customs duty increase proposed on populated printed circuit boards (PCBs) has divided the local handset industry. One section says it encourages local manufacturing and the other contends it disturbs the level playing field and benefits only Samsung Electronics, which manufactures over 90% of its devices locally.

Imposing the 2% special additional duty (SAD) is a progressive step, said Vikas Jain, cofounder of Micromax Informatics. “It will enable long-term and serious handset manufacturers for setting bigger investments into play and thus provide the necessary impetus to ‘Make in India’ initiative.”

The duty increases costs nominally in the short term and will get mitigated when investments are made in manufacturing based on completely knocked down units, Jain added.

However, the other section, including contract manufacturers, said the duty proposed in the Budget on Wednesday will prove to be disadvantageous to the industry as it may halt potential inbound component-level investments.

“The implementation of 2% SAD would not benefit many companies in the mobile handset industry in India and could potentially disrupt the level playing field in the industry,” said Sanjeev Agarwal, chief manufacturing officer at Lava International.