When we buy any product on the various online stores, the danger of customs duties is always around the corner and sometimes this discourages users who prefer to make their purchase in other stores aware of increased spending, sometimes even 30 / 40%. India is one of those nations that is experiencing considerable economic development and that for the various Chinese companies including Xiaomi, represents an important slice of the market from which to obtain excellent revenues.
However, in December and February the Indian government increased the customs duty of 5 / 10% on the importation of electronic goods and components, with the idea of enhancing "Made in India". On this topic companies like Xiaomi, Haier, Godrej and Blue Star gathered at the LG Electronics India headquarters, in which the fear emerged about the impact that this increase will have on the demand of their products. In fact, Kim Ki-Wan, CEO of LG India, stated that the increases in customs duties were made in an inappropriate manner and will reach shares of 700 billion rupees on the national market for electronics and household appliances and that this will significantly increase the cost of production, which will have to be passed on to consumers.
WILL WE BENEFIT FROM THE INCREASE IN CUSTOMS DUTIES?
The vice president of Xiaomi India, Manu Jain, said the company is working on a plan to mitigate the additional burden due to customs and the rate hike announced in the budget. According to industry sources, however, "Made in India" is rather difficult to implement because the nation simply acts as an assembly center for all domestic producers of smartphones and electronic items with key components such as printed circuit boards, panels for televisions and compressors for air conditioners.
The increase of imported products could therefore arrive at 3 / 5% values but also get to 5 / 6% as stated by Haier and LG ma also the 8% for the TV category. Companies will have to raise prices but yet the Indian government hopes that local production will increase. Furthermore, a long-term impact, because companies can not make adequate investments in the local market due to the limited demand.
