Although the government did not spell this out in the Budget on Wednesday, mobile phone prices are likely to rise by about 1% in the coming months. Finance Minister Arun Jaitley proposed a 2% special additional duty on populated printed circuit boards, which used in the manufacture of mobile phones. The cost of the circuit boards, which are usually imported, is almost 25-30% of the cost of the device.
Bipin Sapra, an indirect tax expert at accounting firm Ernst & Young, told Economic Times that the move to impose an additional customs duty on the imported circuit boards may “lead to marginal cost increase”. The government had justified the move by saying that it would “provide adequate protection to domestic industry”. Sapra also agreed. “This is aimed at incentivising manufacturing of PCB locally, which is major step towards bringing value addition to India,” he told the daily.
The government had imposed a 2% additional tax on these circuit boards last year as well. However, it had to be withdrawn in May following demands from industry leaders. They had argued that India was not yet ready to manufacture this component, according to Economic Times.