The Union Government’s decision to hike customs duty on smart-phone components in Budget 2018 has caused smartphone prices to spike this financial year.

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Smartphone makers are finalising plans to increase product localisation in the attempt to increase procurement of components locally, and control the medium-to-long-term price impact.

One Plus, has said that it will consider procuring locally made smart-phone components. The brand imports printed circuit boards (PCBs), batteries, covers and cameras for its Made-in-India phones.

“Some of these components, like batteries, can be manufactured locally and integrated in the device,” said Vikas Agarwal, GM (India), OnePlus, “We are also working with our component suppliers who make components like PCBs to start producing them in India.The Indian arm of Singapore-based tech firm Flex, which makes phones for Lenovo, Moto, Huawei, and Jio, will begin a separate line for printed circuit board assemblies (PCBAs).

This could see localization of Flex’s Indian-made smart-phones increase by 40%.

“Our localization is currently in the range of 10-15%. But over the next six months, with PCB-A manufacturing taking place in India, our localization will be 50%,” said Sekaran Letchumanan, VP (Operations), Flex India.

Flex India will also double capacity of 10 million smart-phones in the next three years at its Sriperumbudur plant.

Xiaomi has hinted at passing cost benefits to buyers. “We hope that manufacturers would be incentivised to locally source components and drive back benefits to consumers. Our aim is to price our products close to cost and make them accessible,” said Manu Jain, MD, Xiaomi India, said.

Industry experts say localisation, when rolled out, could not only mitigate the impact of the customs duty hike, but bring down operational costs by 10 to 12%, in the medium term.

First Published:Apr 5, 2018 8:19 AM IST