Prices of low-cost mobile phones may go up marginally, but those of hi-end mobiles may not change following restructuring of excise duty on mobile phones in the interim budget.
Excise duty on mobiles has been restructured at 6% with Cenvat credit and 1% without Cenvat credit in the budget.
According to Pankaj Mohindroo, national president of the Indian Cellular Association (ICA), "The clubbing of the two slabs-- under Rs 2,000 and above Rs 2,000 maximum retail price -- is a good rationalisation move because this will prevent under-invoicing."
Also, the decision to have a uniform 7% import duty on mobile phones across price bands means that the net duty load on devices with price below Rs 2,000 will increase from 2% to 7%.
Mohindroo said there will be a marginal increase in price of phones under Rs 2,000 due to this. For example, a phone with Rs 1,000 will see a price rise of around Rs 30.
According to Finnish handset maker Nokia, beneficial CVD rate of 1%, as proposed in the budget, does not extend to mobile phone manufacturing operations set-up within special economic zones (SEZs) and export-oriented units (EOUs) as the clearances by these units to the domestic tariff area are treated at par with physical imports into India.
"This will, therefore, exclude larger manufacturers like us, which account for major part of the domestic production, from availing the benefit. We urge the government to extend the incentive to units operating from SEZs and EOUs as well," P Balaji, MD, Nokia India, said.