👍 Good news to homegrown Indian phone companies

The Union budget 2023 brought some good news to homegrown Indian phone companies.

The announcement. Customs duty on the camera lens and its inputs/parts for use in the manufacturing of the camera module for mobile phones has been slashed from 2.5 per cent to zero.

• Plus: Relief in customs duty on import of certain parts and inputs like camera lens, and

• Continuation of the concessional duty on lithium-ion cells or batteries for another year.

• The Finance Minister said these moves would "further deepen domestic value addition in manufacture of mobile phones."

• Mobile phone production in India has increased from 5.8 crore units, valued at about Rs 18,900 crore in 2014-15, to 31 crore units, valued at over Rs 275,000 crore in the last FY.

How it matters. The budget proposals pertain to key cost elements in the indigenous manufacture of phones, even if not the costliest.

• The quality of the mobile phone camera — how many megapixels, how many lenses, etc — can be a deal-breaking aspect for many buyers.

• Reducing the duty on camera elements to zilch is bound to help pare down the cost of the bill of materials of a 5G phone, as will the customs duty holiday on the lithium-ion battery fabrication.

Opportunity for India-made 5G phones. Even six months ago, two Indian phone makers announced 5G phones priced around Rs 10,000 — Noida (NCR)-based Lava International and Hisar-based Maplin.

• The latest customs duty announcements might help makers like these keep their prices even more competitive.

• With the demand for 5G becoming increasingly important, we are likely to see more new, non-traditional 5G phone developers come up.

• In November last year, Bengaluru-based startup Optimus Logic unveiled a prototype of what it called "India’s 1^st homegrown Global 5G mobile," called the Optimus Rhino 5G 1, which it developed in association with IIT Hyderabad.

Bottom line: Clearly, India’s vibrant startup community is seeing 5G as both a challenge and an opportunity to enter the new mobile phone ecosystem with innovative ideas. The budget proposals are likely to help in that regard.