Chinese phone makers Oppo and Vivo may follow in the footsteps of their competitor Samsung and manufacture key parts in India in the next one year. Sources told Business Standard that move comes after the Centre postponed imposition of 12.5 percent countervailing duty (CVD) on imports and excise duty of a percent without input tax credit on mobile components.
Phone companies were reportedly demanding that the government postpone levy of duties from February 1, 2019, to April 1, 2020, saying that it affects investment in the local ecosystem that they are trying to develop. Samsung is planning to start manufacturing locally in 2020. At present, both Vivo and Oppo have manufacturing units in Noida.
The deferment of duties will buy handset makers time to coordinate their production plans with suppliers. “Many would also have to find suppliers of those components, while others may have to put a plan in coordination with their existing suppliers, who would have to start producing parts. It is a step in the right direction,” a source told the newspaper.
Local manufacturing needs to be developed in India to source crucial components from, according to Vikas Agarwal, India head of OnePlus. He added that localisation is on the agenda for many brands to increase ‘local value addition’.
To give its flagship ‘Make in India’ scheme a push, the government wanted to put its phased manufacturing programme (PMP) for FY20 in effect on February 1, 2019, instead of 2020, to coincide with the interim Budget. But there was pushback from several firms on account of unpreparedness.
PMP aims to turn India into an electronics manufacturing hub by increasing the cost of imports. The Centre hiked customs duty on phone parts in 2017, to promote local manufacturing.
When the government expressed the intention to advance the dates of PMP to February 1, Samsung wrote to the Prime Minister’s Office saying that this move would impact its local production and exports. It added that some of its popular models would have to be discontinued if duties kicked in early. It also warned of a cut in exports from India to 15 percent from the 40 percent planned earlier.