Import duty levy may impact smartphone prices, says LG

Korean electronics brand LG will continue assembling its smartphones in India despite import duty hike on components imported from abroad, but is expecting an increase in price of devices as a consequence.
“We are totally committed to MAKE IN INDIA vision & will continue to manufacture in India. In the long term, this situation will also create possibilities of local production by vendors including display & other components,” said Advait Vaidya, Business Head - Mobile Communications at LG Electronics, India.

Beginning October 1, the Central government levied 10% basic customs duty on imports of display assembly, touch panel/cover glass assembly, despite industry request to defer the levy by a year as these components are not made in India yet.

Thus, smartphone prices are expected to go up by 3%-5% as per industry estimates.

“We are closely monitoring the situation, it may have an impact on prices,” Vaidya said in response to ET’s emailed queries.

LG assembles its smartphones in its Pune factory and currently has less than 1% share in Indian smartphone market.

These components constitute 25% of a device’s bill of materials. It may take two years to establish display fab units in India subject to companies’ readiness to invest Rs 300-400 crore for one unit.

ET had reported that smaller smartphone brands by volume may resort to importing completely built units in this festive season as a consequence of high duties.