Mobile firms hedge bets, seek incentives for India ops

Global mobile device makers assembling in India may seek financial incentives from the government to ensure they remain competitive amid the 26 per cent duty slapped on their exports to the US.

- SURAJEET DAS GUPTA

Otherwise, they may have to hedge their bets by shifting new capacity to other countries—where duty imposed on US exports is lower. A top executive of a mobile company said: "Indian tariffs on components add up to 6-8 per cent of the bill of materials even after reduction in the last Union Budget. Even if a company is doing 50-50 between domestic sales and exports, half of this, that is 2-3 per cent, is a cost also imposed on the export quantity, creating an additional disability. For companies like Apple Inc, which exports bulk of its phones, it would be even higher. This disability has to be removed immediately if we want to remain competitive vis-a-vis prospective new locations."

India has a relative tariff advantage now over China (where duty slapped is 54 per cent) and Vietnam (where duty to the US is 46 per cent).

But in a quick response, the Vietnam Trade Ministry has requested the US to put on hold the planned new tariffs and go for further negotiations with them. It is planning to send a delegation to the US under deputy prime minister Ho Duc Phoc.