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Prices of consumer electronics such as smart speakers, laptops and tablets may rise following an increase in import duties announced in the budget for fiscal 2022.

Mobile phones are also likely to see a modest rise in prices though other smart devices are expected to feel the impact more, according to industry analysts.

“Only about 40% of tablets and laptops are assembled in India, while more than 90% of smart speakers are imported. In these categories, we are where we were with mobile phones five years ago," said Tarun Pathak, associate director, Counterpoint Research.

Custom duties on “some mobile phone parts" will increase from nil to 2.5%, finance minister Nirmala Sitharaman said on Monday. Duties on printed circuit board assembly (PCBA), camera modules, and connectors have been raised to 2.5% from nil. PCBA and moulded plastic for manufacturing chargers and adapters will incur duties of 15%, up from 10% earlier. Input parts for mobile chargers (other than PCBA) will have 10% duty, up from zero earlier, while parts for Li-ion cells will incur duties of 2.5%.

The impact on mobile phone prices will probably be in the 400-500 range, which is something original equipment manufacturers tend to absorb, Pathak said. Many component manufacturers are already in India or in the process of setting up, making the risk lower for this industry.

The same isn’t true for others in the consumer electronics space. The impact on these products will likely be closer to 3%, Pathak estimated.

The India Cellular and Electronics Association wrote a letter to Ajay Prakash Sawhney, secretary, ministry of electronics and information technology, expressing its disappointment over the budget announcements. “There is a widespread feeling of disappointment in the proposals of duty hikes...this will be a big setback and can collapse the developing mechanics industry vertical," the industry body wrote.

The government’s move is probably meant to encourage companies to manufacture in India, but increasing duties alone may not help, Pathak said. The government will have to address deeper disabilities in India’s manufacturing space and provide better infrastructure and skilled workers, he said.

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