Government May Impose 10 Per Cent Duty On PCBs For Smartphones To Boost Local Manufacturing: Report

Government May Impose 10 Per Cent Duty On PCBs For Smartphones To Boost Local Manufacturing: ReportTechnicians assemble smartphones on the production line in Noida. (Udit Kulshrestha/Bloomberg via Getty Images)

The Ministry of Electronics and Information Technology (MeitY) has proposed imposing a 10 per cent duty on the import of printed circuit boards (PCBs), a key smartphone component, to boost domestic manufacturing, Mint has reported.

A PCB acts as a bed for parts such as processors, memory and wireless chip sets and accounts for about half the cost of a smartphone once populated with components. Most manufacturers in India currently import PCBs which are already loaded with components and then assemble them locally.

Once the Ministry of Finance approves the proposal, duty could be imposed on the import of PCBs within days, making their import costlier.

This move will force players such as Apple to expand their manufacturing capabilities in India to mount components locally. At the same time, the move will give an edge to foreign players like Samsung and Indian companies like Lava as they already have the infrastructure to mount components locally.

“This will be a step in a good direction. This is how full-scale manufacturing happens,” Lava co-founder S N Rai has said, adding that the move will boost local production of smartphone components such as cameras and screens.

OPPO, a Chinese smartphone maker which is setting up a manufacturing facility in north India, is also installing surface mounting machines. Taiwan's Foxconn, one of the biggest global contract manufacturers of electronics, already has the capability to mount components on PCBs in India.

Other manufacturers - foreign and domestic - are likely to follow suit to remain viable players in the world’s second-largest smartphone market.

The move, which could be the latest step in Prime Minister Narendra Modi’s phased manufacturing programme, is likely to be resisted by several countries. China, Canada and the United States had at the World Trade Organization (WTO) last week raised concerns over India’s imposition of duties on such devices.