India mulls phone duty plan


SENDING A MESSAGE: Modi’s plan for growth includes
making India a global manufacturing hub of products
such as smartphones and printed circuit boards (below)
SENDING A MESSAGE: Modi’s plan for growth includes making India a global manufacturing hub of products such as smartphones and printed circuit boards (below)

CIRCUIT BOARD LEVY MAY BOOST LOCAL PRODUCTION

INDIA is exploring new duties on the im­port of a key smartphone component, ac­cording to two government sources, the latest in a series of moves aimed at boosting domestic manufacturing in the world’s second-biggest smartphone market.

India’s Ministry of Electronics and Infor­mation Technology has mooted a proposal to levy a 10 per cent duty on the import of populated printed circuit boards (PCBs), two officials said last month, declining to be named as the matter is not public.

A PCB is a bed for key components such as processors, memory and wireless chip sets that are the heart of an electronic de­vice. Once populated with components, PCBs account for about half the cost of a smartphone. Currently, most manufactur­ers of smartphones import PCBs which are already loaded with components to India and then assemble them locally.

If India’s finance ministry clears the rec­ommendation on new duties, these could be levied in a matter of days, say govern­ment and industry sources, thus making populated PCB imports more expensive and pushing players to locally mount com­ponents instead.

India’s finance, electronics and trade ministries did not respond to requests for comment on the plan.

In the near term, such actions could spur players like Apple to widen their limited manufacturing and assembly capabilities in India and give an edge to those like Korea’s Samsung Electronics and home-grown firm Lava, which already have machines to mount components onto PCBs.

Apple did not immediately respond to a request for comment.

China’s OPPO is also putting up surface mounting machines in a new facility it is building in north India, a company execu­tive said in a recent interview.

The local unit of Foxconn, one of the big­gest global contract manufacturers of elec­tronics, also has the capability, according to two industry sources. Foxconn was not im­mediately reachable for comment.

“This will be a step in a good direction. This is how full-scale manufacturing hap­pens,” said SN Rai, co-founder of Lava. He added that the move would gradually also boost local production of components such as smartphone cameras and screens.

The move, if implemented, would be the latest step in prime minister Narendra Modi’s phased manufacturing programme (PMP), a plan unveiled in 2016 to step up local value addition every year in the smart­phone manufacturing space.

About 134 million smartphones were sold in India last year, the world’s second-biggest market after China.

Modi’s government has since raised du­ties on a range of low-value items such as batteries and chargers and on imported phones.

Any move to impose duties on populated PCBs, however, could risk a backlash from several countries and heighten trade war worries. China, Canada and the US, among others, last month raised concerns at the World Trade Organization around India’s imposition of duties on such devices.

In its annual budget last month, India’s government outlined higher duties on products including imported smartphones and a range of components.

Modi hopes to turn India into a global manufacturing hub in a bid to boost growth and create millions of new jobs. (Reuters)