Local Entrepreneurs Glee as Imports of Mobiles and LED TV gets Expensive

The move is going to provide a fillip to the government's pet Make in India campaign to boost domestic manufacturing
Local Entrepreneurs Glee as Imports of Mobiles and LED TV gets Expensive
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Correspondent, Entrepreneur India
4 min read
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Finance Minister’s announcement of increasing the customs duty on consumer electronic goods like mobile and LED TV and its accessories from 15 to 20 percent could prove to be a boon for domestic manufacturers according to industry experts. 

The move is expected to provide a fillip to the government's pet Make in India campaign to boost domestic manufacturing and make it more competitive while increasing the prices of imported mobiles and LED TVs for the common man.

 Apart from consumer electronics, the government has also increased the customs duty on imported cars and motorcycles, fruit juices, perfumes, and footwear. 

“With this hike, international companies will have to look up for a solution locally rather than importing the products. Thus, both big and small companies which manufacture within India will be benefited. The move will help in making India a global manufacturing hub”, CM Singh, Managing Director, CMS Electronic Junction, a leading chain of electronic stores in India said.

Further, the move is expected to encourage foreign players to manufacture products in India rather than import them as the prices are bound to go up, especially for mobiles and television sets. This could result in successful job creation at a time when the government is facing flak on job deficit.

“Government’s vision on the make in India has been very positive for consumer durable sector. This budget reiterates Government’s focus on the make in India for consumer durables products and specific to televisions. We at Onida had been into manufacturing televisions since the beginning, this has really paid off. We are poised for contract manufacturing for any large brand who would like to enter the country”, said MD of Vijay Mansukhani at Mirc Electronics Limited (Onida).

KS Raman, Former President, Consumer Electronics & Appliances Manufacturing Association (CEAMA) believes with this move, Indian manufacturers who make products with complete backward integration will benefit immensely.

"Manufacturers such as Videocon, one of the leading Indian manufacturers with a large workforce will be immensely benefitted as they have a very strong manufacturing base spread across the country. Even smaller manufacturers like Vierra will be benefitted from this step," Raman said. 

While at one side the budget seems positive for the domestic consumer durable brands, Hyderabad-based online mobile sellers like LatestOne.com believe otherwise.

Ameen Khaja, the CEO of LatestOne.com, think the move to increase customs duty on mobile phone accessories to 15 percent is something that is going to affect the industry in a not-so-positive manner.

"Unless we have domestic capabilities to manufacture such products that can be called world-class, we will have to continue to rely on imports. We as a start-up cannot afford to absorb this and may have to pass on the tax burden to consumers directly. This will, in the short-run at least, negatively impact business”, said Khwaja.

Doubling the allocation to Digital India

In this populist budget, the Finance Minister has doubled the budget for Digital India Scheme to almost INR 3,073 cr for the fiscal year 2018-19. The move is seen as a major step towards digitizing the nation in areas like broadband and mobile connectivity and government services on demand. Furthermore, the minister has also allocated INR 10,000 crore for the 5 lakh WiFi HotSpots to provide Broadband access to 5 crore rural citizens.

"The Finance Minister has doubled the budget for the Digital India Scheme, emerging as a major move towards assisting the nation to progress further. The second development of investment of INR 10,000 crore for rural Wi-Fi hotspots, giving 5 crore citizens access to broadband speed internet by the deployment of 5 lakh Wi-Fi hotspots should help bring more consumers online, increasing digital consumption of services like OTT, entertainment, banking, and e-commerce. We at nexGTv feel that all these steps are a definite plus for the significant growth of the digital businesses in the country", said Abhesh Verma, COO nexGTv.

Increasing allocation for digital India and the overall strong thrust on digitalization is a welcome step. Initiatives such as High-speed connectivity and Wi-Fi access to 5 crore rural citizens and tax disallowance on cash expenditures above INR 10,000 for all entities now also give the digital movement a great push and will benefit internet businesses. 

However, some more direct incentives for promoting digital ecosystem in form of lower MDR or cash back would have been welcomed by online platforms as well as merchants”, said Mitesh Shah, Head of Finance, BookMyShow

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