Mobile phone users in India would be curious to know what this year's budget has in store for them after the government increased duties on smartphones sharply last year, which resulted in price hike in mobile handsets.
Finance Minister Arun Jaitley will present Union Budget 2016-2017 on Monday, Feb. 29, and it will be interesting to see what he has to offer to mobile phone manufacturers and smartphone vendors in view of the BJP-led NDA government's "Make in India" programme.
Most consumers expect the Finance Minister to cut customs and excise duties to make smartphones affordable.
"Lower the taxes and import duties on mobile phones and raw materials, respectively, which will make quality phones more affordable and easily available," said Dhiraj Mahindra, a PR professional. He added that lowering service tax rates on essential service like telecom will bring down mobile bills and data charges.
Felix L, a student from St. Joseph's College, Bangalore, thinks the government should not make smartphones too expensive for the middle class and rural population by imposing excessive duties.
"Consumers, especially students and rural population, find difficult to buy a desktop or a laptop, but may be able to afford a smartphone which will be of great help. So, I expect a decrease in import duties on smartphones in the upcoming budget," he said.
Tarun Pathak, market analyst at Counterpoint Research, thinks that the government should not increase duties but come up with other incentive schemes like tax holiday and concessions that will address the needs in the information and communications technology (ICT) segment.
"Rather than a direct increase in duties we estimate some of the policies being ironed out including the tax holidays, concessions, and export incentives, and at the same time accelerating the time-frame involved in certain processes from getting approvals to compiling certain norms which will ensure faster time to market for OEM's with their devices," he said.
He added further that he doesn't expect overall pricing of smartphones to be changed or passed on to the end user after the Union Budget is announced.
"While the duties have been reduced on manufacturing of mobile phones in India, the actual impact of the benefit is yet to be felt as the manufacturers are in the process of setting up the manufacturing facilities," said Mahesh Jaising, partner, BMR & Associates LLP. He said that supporting local manufacturers will bring down the price of smartphones in the long run.
Victor Kolunii, a student at IIM Lucknow, endorsed the ministry of communications and information technology's (MCIT) proposed 10 percent basic customs duty on populated printed circuit, saying that it will "boost local manufacturers as the supply chain will get shifted to the home country."
"In the short run, the consumers who prefer imported goods will definitely be affected as it will be dearer to them. But in the long run, I believe it will do good as well given that the local manufacturers become at par in quality and service with players from outside the country."
It may be mentioned here that the telecom ministry has proposed excise duty exemption for electronic equipment, including smartphones, routers, modems and television set-top boxes.
Last year's budget caused uproar after the finance minister increased excise duty to 1 percent without CENVAT credit or 12.5% with CENVAT credit, from 1 percent without CENVAT credit or 6 percent with CENVAT credit .