Why smartphone makers are irked over levy on accessories

Firms with manufacturing facilities in India seek customs cut on accessories as it places them against importers like Apple, The Economic Times reports

Highlighting how smartphone makers with local manufacturing facilities are at a disadvantage vis-à-vis Apple, an industry body has asked the government to reduce the import duties on accessories, The Economic Times reported on Tuesday. 

The Union Budget 2016 levied 29% customs duty on batteries, chargers, adapters, speakers and wired headsets. These are imported by firms that have manufacturing facilities in India. 

However, importers of completely-built units pay only 12.5% on the same inputs as these are packaged inside the box, the report stated. Accessories make up for almost 40% of the cost of manufacturing handsets. 

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Some leading brands have also directly reached out to the government against Apple. But the communication has only meant to reduce the duty. 

“There is an anomaly in duties which the government should look into, as it will benefit only a few brands like Apple which are currently importing finished goods and have no manufacturing investment in India as compared to all the other smartphone makers who are investing in India," said Ravinder Zutshi, chairman of the mobile and communications council of the Consumer Electronics & Appliances Manufacturers Association (CEAMA).

As a result, the net benefit that companies making handsets in India compared to importers like Apple has come down to 5% from 12-13% earlier. 

Currently, Samsung makes its entire portfolio in India. Other majors like Micromax and LG have begun production in India as well, the report added.