India, Referring To The Phone And The Localization Of Production Taxes

- Mar 24, 2016-

Details are listed a number of reforms on foreign investment in 2016 annual budget report of the Government of India in the latest release. Among them, the production of import tariffs on mobile phone chargers, adapters, batteries, wired headset, speakers raised to 29.441% from 0; phone printed circuit board (PCB) production and import duties raised from 2% 0. Correspondingly, if the mobile phone manufacturing companies locally sourced chargers, adapters, batteries, wired headset and speaker, it raised the consumption tax rate from 2% on a 0 (supplier choose not to deduct input) or 12.5% (contact vendor selection deduction proceeds). These provisions with effect from 1 March 2016.
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"The move is aimed to protect the local mobile phone manufacturers in India to promote the development of Indian mobile phone industry, it can be said that this is one of the measures to promote the 'Made in India' is." Zhongshan University associate professor of the Asia-Pacific Institute for International Business Daily Huangying Hong He told reporters.
Huangying Hong believes that the longer term, India will be forced to raise taxes in many foreign mobile phone and accessories manufacturers to set up factories in India to the production and domestic sales in India to achieve the purpose of the policy to some extent. In the short term, industrial transfer takes time, it is expected that India's domestic mobile phone prices will rise, the development of the smart phone market disadvantage.
Asia-Pacific Academy of Social Sciences researcher at the Global Strategy Institute and assistant Li Tianguo also believe that the Indian government hopes to make mobile phone accessories manufactured locally. He told the International Business Daily reporter said that India could increase tariffs raise the cost of imported goods to protect the interests of domestic suppliers, more important is to attract foreign companies to invest in India production.
In fact, with tariffs as a means to foster the domestic manufacturing industry, India is not the first time. It is reported that India's import tariffs on mobile devices once fierce zo from 1% to 6%. March 2015, India has significantly raised the tax rate to 12.5%. Insiders believe that, under the tariff restrictions, the next few years the Indian mobile phone market will continue to be in a semi-assembled parts as the main mode of production.
This time, the combined tax rate charger India, and other parts of the transmission line has increased to 29.441%, and if the manufacturer or its customers set up factories in India, it will be able to import tariffs down to 1%, which is quite large for manufacturers temptation. Right now, India's goal is to attract mobile phone manufacturers as well as relatively high technical accessories business, goals for the future is expected to begin attracting higher technology industries. "At the same time, India is such a large foreign retailers, medical equipment and social insurance industry to increase efforts to open up, so this change can be said to be global." Huangying Hong said.Investment need to be cautious
Engaged in the supply chain management vendor estimates India, smartphone penetration is still below 15%, replacement tide was brewing. Now, part of the battery maker said it will soon visit India visit, but now has started construction or acquisition in the Indian mobile phone maker has nearly home. "After the entry into force of the reform of the new rules for mobile phone manufacturers in terms of exports alone to capture the Indian market has been too expensive for the stay competitive, is bound to change the current way to take direct investment." Said Li Tianguo, major mobile phone manufacturers in India there Micromax, BarringKarbonn, Lava, etc., but it is difficult to say in the field of accessories which leading companies.
Huangying Hong pointed out, "At present, the Indian mobile phone market is in domestic and foreign manufacturers have equal shares of the situation. Samsung such as foreign and domestic Micromax, Intex and so occupy a larger market share. The change in policy, especially for foreign parts production providers, the challenge lies in foreign investment will be forced to further intensify direct investment in India, was forced to go to take the initiative to become familiar with and adapt to the investment climate in India, in order to play their own advantages in terms of quality and technology. "
However, India's current lack of mature industrial community, to set up factories in addition to the construction costs, related technology and production line cost recovery is also worth consideration.
Li Tianguo frankly, given the level of development of India's serious shortage of supply chain situation, went to India to invest in firms may need to address how the use of local supply chain problems, in fact, from the logistics costs to the cost of intermediate goods, and so will be interested in purchasing companies need to go to India and set up factories concern.
Huangying Hong also pointed out that although investment in India has huge potential, but also a lot of difficulties, including legal red tape, low administrative efficiency. "Of course, if we can take the appropriate investment management strategy, in the present Indian government would like to vigorously promote the reform in the context of active investment in India is also an option worth considering."


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