As per the Indian Cellular and Electronic Association of India (ICEA), the handset manufacturing industry is staring at a loss close to Rs 150 billion with production coming to a halt amid COVID-19.
The production is going to be heavily impacted with Foxconn, Flex, Wistron closing operations amid the three-week nationwide lockdown. These firms together make a bulk of the smartphones sold in India.
As per ICEA, at present the industry has turnover between Rs 5 billion and Rs 7 billion per day, and a shut down for about three weeks essentially means loss ranging between Rs 100 billion and Rs 150 billion.
Meanwhile, to address the COVID-19 crisis, finance minister Nirmala Sitharaman announced that traders with annual turnover less than Rs 50 million can file goods and services tax (GST) returns for March, April and May till June 30, 2020 without any late fees or penalties levied on them.
To this end, the industry believes that government’s move to defer GST filings will not provide any breather for the ailing mobile phone industry. The industry is staring at a 6 per cent point rate increase from April 1, 2020 which is expected to further drag demand amid the COVID-19 outbreak.
Khaitan & Co suggests that though returns can be filed till June 30, 2020 any phone sold after April 1, 2020 (including inventory) will be billed at 18 per cent GST (from present 12 per cent).
Further, International Data Corporation (IDC) believes, even after 21 days of shutdown, it will take at least two quarters for demand to revive. Top selling brands including Realme and Samsung have already communicated that the rate hike will be passed on to the consumers.
Further, Realme estimates that phone prices could go up by 12 per cent -15 percent due to several reasons plaguing the sector.