Don’t anticipate significant price drops for smartphones following Budget 2024
Finance Minister Nirmala Sitharaman has announced a reduction in Basic Customs Duty (BCD) on smartphone components in the Union Budget 2024. The BCD on items like printed circuit boards and mobile chargers will be decreased from 20% to 15%. While this move may suggest a potential decrease in smartphone prices in India, experts believe that the market may not see significant changes. Factors such as thin profit margins, rising chipset costs, currency fluctuations, and fierce competition in the smartphone market could limit the benefits passed on to consumers. Market leaders like Samsung are unlikely to offer major price cuts on their devices, as they manufacture most of their products in India. Industry analysts predict that the sub ₹10,000 segment could see some excitement with the launch of affordable 5G chipsets, but the impact on other price segments may be minimal. Overall, the 5% reduction in BCD may not have a significant impact on smartphone prices, as it ultimately depends on whether brands choose to pass on the benefits to consumers. Upskilling initiatives announced by the government are seen as a positive step towards developing a high-skilled labor force in the electronics manufacturing sector.
Similarly, IDC India Deputy Director Navkendar Singh said, “I would like to see some price reduction below ₹25,000, especially below ₹12,000 to ₹13,000 to increase adoption of 5G devices and to see a 5G device below ₹8,000, which can definitely help to get on the market growth track by moving the feature phone to the entry-level smartphone.”
Promotes healthy competition in the smartphone market
Transsion India, the company that owns smartphone brands like itel, Infinix and Tecno, a dominant player in the affordable segment, feels the government’s move will increase competition.
“Transsion India welcomes the Finance Ministry’s decision to reduce basic duty on mobile phones, portable PCBA and chargers from 20% to 15%. This policy change will significantly benefit both manufacturers and consumers, promote a more competitive smartphone market and strengthen our position in the global market, said Arijeet Talapatra, CEO, Transsion India.
BCD’s 5 percent discount can help new entrants to price their mobile phones more competitively. “We believe the government will streamline the tariff structure for mobile phones at around 15% or below, which has grown into a strong manufacturing ecosystem that adds value. This 5% deferral is good for some new entrants who are coming into the smartphone market and don’t have a partner yet “, said Neil Shah, Director of Counterpoint Research.
