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Budegt 2018-19:Not great hints for consumer durable, mobile handset industry, says Coolpad

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Syed Tajuddin, CEO, Coolpad India

NEW DELHI: This budget is pretty regular with a mix bag of things, nothing path breaking or outstanding to boost the manufacturing sector, according to Syed Tajuddin, CEO, Coolpad India.

“For agricultural and rural economy there is some really positive news, but not great hints for the Consumer durable and mobile handset industry. The increase in custom duty from 15% to 20% will definitely hamper the cost to customer, especially when it comes to getting repairs for the high-end devices,” he said.

“While increase in custom duty on handsets will compel brands to manufacture or assemble more in India, still there is not great support for local ecosystem for manufacturing spare parts. And this lack of local spare part manufacturers will mean a tough situation for mobile handset brands. Hence a brand is compelled to import most of the spare parts and customers have to bear some burden of it,” Tajuddin added.

In the first General Budget 2018-19 after the roll-out of the Goods and Services Tax (GST), the Union Minister for Finance and Corporate Affairs, Arun Jaitley, made a calibrated departure from the underlying policy in the last two decades, wherein the trend largely was to reduce the customs duty. In the General Budget 2018-19 presented in Parliament.,

Jaitley acknowledged there is substantial potential for domestic value addition in certain sectors, like food processing, electronics, auto components, footwear and furniture. The Finance Minister thus proposed to reduce customs duty on raw cashew from 5% to 2.5% to help the cashew processing industry.

To further incentivise the domestic value addition and Make in India, the Finance Minister proposed to increase customs duty on mobile phones from 15% to 20%, on some of their parts and accessories to 15% and on certain parts of TVs to 15%.“This measure will promote creation of more jobs in the country’Jaitley added. In fact, this will make the domestic items cheaper than imported ones and will generate more demand which, in turn, will create more employment opportunities for the people at large.

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Apple supplier Murata expects half billion 5G phones in new year

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By Takashi Mochizuki and Yuki Furukawa

NEW DELHI: Murata Manufacturing Co., the world’s biggest maker of ceramic capacitors for Apple Inc. and other smartphone brands, expects demand for fifth-generation wireless devices to surpass 500 million handsets in the coming fiscal year, building on a rush to replace Huawei Technologies Co. in the global consumer arena.

Apple, Samsung Electronics Co. and Chinese rivals Xiaomi Corp., Oppo and Vivo are vying to secure components for their devices, hoping to fill a void as Huawei’s mobile business shrinks under the weight of U.S. sanctions. President Norio Nakajima said in a December interview that Murata’s factories won’t be taking a holiday break as they work to catch up with mounting orders, adding “the situation is most severe with our cutting-edge capacitors for smartphone use.”

“These handset makers are competing to grab our supply capacity once taken by Huawei, and I am not sure how much of it is backed up by their actual production forecast,” Nakajima said. “I feel like the move is overheated, and thus expect their orders would drop in February and March.”

Murata is the global leader in MLCC, or multilayer ceramic capacitors, used to regulate electric flow in circuit boards. Hundreds, sometimes thousands of them are attached to electronics ranging from smartphones to automobiles.

“The industry had 300 million units of 5G smartphones during the current fiscal year, and I expect that to increase to at least 500 million in the next fiscal year,” the president of the Kyoto-based company said. “We will continue making capital expenditure to keep up with the growing demand.”

Analysts deem the Murata chief’s stance too conservative. Ace Research Institute’s Hideki Yasuda doesn’t expect demand from Apple and its ilk to drop at any point in this calendar year, fueled by stronger-than-anticipated consumer appetite for 5G phones. Handsets set to be released this year are also going to be compatible with a wider set of frequencies, expanding the need for Murata-made components to adjust electricity flow.

Yasuda said Murata’s production hiccups are representative of severe shortages across the electronics supply chain, affecting the assembly of many products, including video game consoles. Sony Corp.’s PlayStation 5 and Microsoft Corp.’s Xbox Series X both remain limited in supply, nearly two months after their initial release.

Murata’s Nakajima doesn’t dispute that demand for its MLCC would remain strong throughout this year, though he said he expected a brief respite after China’s Lunar New Year holiday. He said the company’s MLCC sales would increase by 10% in its next fiscal year starting in April due largely to 5G phones.

Source: Bloomberg

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Uttar Pradesh approves financial incentives for Samsung display factory

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NEW DELHI: India’s northern state of Uttar Pradesh on Friday said it will give financial incentives to South Korea’s Samsung Electronics Co to set up a 48.25 billion rupee ($654.36 million) display factory.

Samsung is re-locating the factory to the state from China, the Uttar Pradesh administration said in a statement, a move that will help boost Prime Minister Narendra Modi’s flagship drive to make India a manufacturing hub.

India is the world’s second-biggest smartphone market with significant growth potential, which has driven companies such as Samsung to expand locally.

New Delhi earlier this year also approved financial incentives–under a $6.65 billion federal plan to boost domestic smartphone production–for 16 companies, including Samsung and top Apple suppliers Foxconn, Wistron and Pegatron.

On Friday, Uttar Pradesh said Samsung will receive 7 billion rupees in financial benefits and will also get an exemption from a tax payable on the transfer of land for the factory.

Samsung had sought tax and other incentives from Uttar Pradesh for this smartphone display manufacturing plant, Reuters previously reported.

The unit, expected to create 510 direct jobs, is expected to be operational next year.

Samsung already operates one of the world’s biggest mobile phone manufacturing plants in Uttar Pradesh.

Source: Reuters, Reporting by Sankalp Phartiyal in New Delhi and Saurabh Sharma in Lucknow; Editing by Sam Holmes

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Vivo India to raise localisation level to 40 per cent by 2021

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NEW DELHI: Smartphone brand Vivo India on Friday said it was planning to raise the localisation level in the phones produced in India to 40 per cent by 2021, a senior company official said.

The government in the recent past increased import duty on accessories and components of mobile phones like motherboards, panels and touchpads by about 10 per cent to promote local manufacturing.

Currently, the localisation level for Vivo India is 15 per cent for all the handsets it sells in India and the company had committed to raise it to 40 per cent at its Noida manufacturing facility in continuation of Vivo’s commitment to ‘Make in India’, Vivo India director-brand strategy, Nipun Marya said at the launch of V20 SE in West Bengal.

Vivo claimed 28 per cent market share at the national level and was the top brand in terms of volume in the offline smartphones market in 2020.

In West Bengal the market share is 21 per cent, the company claimed. In the last quarter Vivo’s market had expanded while in West Bengal it shrank by one per cent.

West Bengal contributes over 5 per cent (by volume) to the overall smartphone market in India selling approximately 5 lakh smartphones per month, Marya said.

He did not elaborate on sales till now in the ongoing festive season and said the next 10 days remains to be crucial.

Source: Press Trust of India

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