India is exploring new duties on the import of a key smartphone component, according to two government sources, the latest in a series of moves aimed at boosting domestic manufacturing in the world’s second-biggest smartphone market.
India’s Ministry of Electronics and Information Technology has mooted a proposal to levy a 10 percent duty on the import of populated printed circuit boards (PCBs), two government officials said last week, declining to be named as the matter is not public.
A PCB is a bed for key components such as processors, memory and wireless chipsets that are the heart of an electronic device. Once populated with components, PCBs account for about half the cost of a smartphone.
Most manufacturers of smartphones import PCBs that are already loaded with components to India and assemble them locally.
If India’s finance ministry clears the recommendation on new duties, these could be levied in a matter of days, government and industry sources said, thus making populated PCB imports more expensive and pushing players to mount components locally instead.
In the near-term, such actions could spur players such as Apple Inc to widen their limited manufacturing and assembly capabilities in India and give an edge to those like Samsung Electronics Co and homegrown firm Lava International Ltd, which already have machines to mount components onto PCBs.
China’s Oppo Mobile Telecommunications Corp (歐珀) is also putting up surface mounting machines in a new facility it is building in north India, a company executive said.
The local unit of Hon Hai Precision Industry Co (鴻海精密) also has the capability, two industry sources said.
“This will be a step in a good direction. This is how full-scale manufacturing happens,” said S.N. Rai, co-founder of Lava.
The move would also gradually boost local production of components such as smartphone cameras and screens, he added.
If implemented, it would be the latest step in Indian Prime Minister Narendra Modi’s phased manufacturing program, a plan unveiled in 2016 to step up local value addition every year in the smartphone manufacturing space.
Modi’s government has since raised duties on a range of low-value items, such as batteries and chargers, and on imported phones.
However, any move to impose duties on populated PCBs could risk a backlash from several countries and heighten trade war concerns. China, Canada and the US among others last week raised concerns at the WTO over India’s imposition of duties on such devices.
In its annual budget last month, India’s government outlined higher duties on products, including imported smartphones and a range of components.
Modi hopes to turn India into a global manufacturing hub.
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