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India enacted a new ten-percent import tax on a number of crucial smartphone components, with New Delhi officially confirming the previously reported move earlier this month. The tariff is specifically targeting populated circuit boards equipped with hardware such as modems, processors, and RAM chips, all of which are key handset parts. The regulatory decision is an extension of the Make in India initiative, a Swadeshi movement introduced in late September of 2014 with the goal of making the South Asian country less reliant on imports and strengthening its economy across a broad range of industries, consumer electronics included.
The domestic strategy saw a wide variety of original equipment manufacturers such as Xiaomi and Samsung move their production operations to India, though high-end devices are still largely imported into the country, with the increased costs of doing so being passed on to consumers. As a result, a number of Android flagships and Apple’s iPhones became more expensive for Indian consumers in recent years, with that trend being likely to continue going forward as New Delhi continues introducing new tariffs meant to discourage imports and compel OEMs to manufacture their products domestically. While India is the world’s only major smartphone market that’s still experiencing massive growth on an annual basis even as global handset shipments are now in decline for the first time ever, ultra-premium devices only account for a small portion of its overall sales and hence aren’t worth producing domestically despite continuously rising import taxes.
India already raised customs duty on smartphones this year, having increased it from 15- to 20-percent in February. Some OEMs previously circumvented the country’s regulations by importing smartphone components and only running assembly operations in India, with the newly announced taxes being meant to crack down on such practices. Ultimately, phone makers looking to stay competitive in the entry-level and mid-range segment of India’s smartphone market will likely have to establish entirely independent production operations in the country, most industry watchers agree.