Customs duties aim to boost contract electronics manufacturing in India

By Mark Zetter

Indian government has taken measures to help domestic contract electronics manufacturers in India become more competitive.

Will it be enough beyond helping only a few Indian EMS companies? By broader measures, India remains a problematic destination for foreign OEM decision makers up against a range of deterrent factors when engaging with EMS providers in India. For more on this, a research paper I wrote for Indian think tank, Gateway House.

India EMS manufacturing trends and resources
Vietnam and South East Asia manufacturing
Hourly manufacturing labor wages across Asia
Manufacturing tariffs resources

Add to this, difficulty gaining trust in board rooms. Modi’s government gamed rankings for India in World Bank’s ‘Ease of Doing Business Rankings’.

Changes in Indian customs duty across product categories

Televisions 1.) December-17 – Government hiked import duty from 10% to 20% on finished LED Tvs.
2.) Furthermore, government imposed 7.5% customs duty on LCM panels December-17 which was subsequently increased to 15% February-18.
3.) 10% import duty was imposed on open cell panels February-18. Since Indian companies do not have scale to domestically manufacture open cell panels and it accounts for 60% to 65% of TV costs, customs duty was reduced to 5% March-18.
Mobile phones 1.) Customs duty on mobile phones was increased from 10% to 15% December-17.
2.) Subsequently, customs duty increased to 20% February-18.
3.) Government has a phased manufacturing program for mobile phones to incentivize domestic manufacturing.
LED Lighting Government hiked customs duty on LED lighting from 10% to 20% December-17.
CCTVs/DVRs December-17, customs dusty for CCTV cameras and DVRs were increased from 10% to 15%. This was subsequently increased to 20% in recent July-19 budget.
Room Air Conditioners 1.) Government raised customs duty on completely built room AC units from 10% to 20% September-18.
2.) Customs duty on compressors was also hiked from 7.5% to 10% September-18.
3.) In recent July-19 budget, customs duty was also increased on indoor and outdoor AC units from 10% to 20%.

The above table is from Investec Securities research and highlights product categories served by some India EMS manufacturers the firm follows.

Contract electronics companies in India, Asia, and worldwide

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