The Union Budget 2013 is likely to affect the Indian mobile phone industry adversely. Mobile phones priced over Rs 2,000 are set to become expensive this fiscal year courtesy the six per cent excise duty. While tabling the Union Budget 2013 in the Parliament today, Finance Minister P Chidambaram has made the announcement of rise in excise duty from one per cent to six per cent.
This rise is set to affect the mid-level and high-end phones the most. Commenting on the move, Dr. Satya Gupta, chairman, India Electronics and Semiconductor Association (IESA), said, “This is a blow to domestic mobile handset makers, as excise duty on instruments priced above Rs 2,000 has been raised to six per cent from the earlier rate of one per cent.”
Echoing the same sentiment T M Ramakrishnan, CEO-Devices, S Mobility Ltd, said, “The handsets industry is facing difficult times with increased competition and price wars at large. With the proposed increase in tax for handsets above Rs. 2,000, we do not see a decrease in demand but definitely, there will be pressure on the margins. This decision will surely impact the industry’s focus on making smartphones more affordable. At the same time, rural areas might get that much more difficult for smartphones to penetrate.”
The mobile handset makers are disappointed by the budget at large. Sanjay Jumar Kalirona, general manager – mobile, Intex Technologies, said, “We will take some time as to how much of financial impact will the decision bring to the industry. But at a point in time when the mobile industry is booming, this is not a very positive decision. Eventually, the consumers will suffer with the increased prices of the handsets.”
By Diksha P Gupta, EFYTIMES News Network
