Mobile phones in India are set to become costlier as Finance Minister P. Chidambaram has increased the excise duty on mobiles costing more than Rs. 2,000 from 1 percent to 6 percent.
"About 70 per cent of imported mobile phones and about 60 percent of domestically manufactured mobile phones are priced at Rs 2,000 or below," the Finance Minister said in his Budgetary speech.
"I do not propose to change that in the case of low priced mobile phones. However, on mobile phones priced at more than Rs 2,000, I propose to raise the duty to six per cent," Chidambaram said.
This means that a phone that earlier cost Rs. 10,000 will now cost approximately Rs. 10,495. Phones that earlier cost Rs. 20,000 all now cost approximately Rs. 20,990, while a phone that earlier cost Rs. 30,000, will now cost Rs. 31,485.
Reacting to the proposal, domestic handset maker Lava said in the short term, all players would have to increase prices. "The mobile phone segment is very competitive. But we have no option but to increase prices. It is a hard Budget for the mobile phone segment," Lava Founder and Director S N Rai said.
Asim Warsi, Vice President, Samsung Mobile said, "The increase in the excise duty on mobile phones will not have a positive impact on the mobile industry and should lead to an increase in prices for end consumers."
Nokia praised the decision to keep concessional excise duty on sub-Rs. 2,000 mobiles, but requested a rollback on the increase in excise duty for mobiles over Rs. 2,000.
"The Government's decision to keep concessional excise duty of 1% intact on mobile phones in the sub-Rs. 2,000 category is welcome," P. Balaji, VP and Managing Director, Nokia India, said. "However, we would request the Finance Minister to roll back excise duty increase on mobile phones beyond Rs. 2,000, as mobile phones are the primary mode of access to information and services; a tool for learning, development and income generation for the youth and non urban consumers."
"It is likely to increase sale of grey, unbranded sub standard handsets which is not good for the consumer, industry and exchequer."
In news that may cheer up the consumers, the duty free allowance on jewellery for an Indian passenger, who has been residing abroad for over one year or a person who is transferring residence to India, has been raised to Rs. 1 lakh in case of a lady passenger from Rs. 50,000 earlier. For a male passenger, this has been raised to Rs. 50,000 from Rs. 10,000.
(Updated to reflect that the increase in duty free allowance is for jewellery only)
With inputs from PTI