Smartphone makers in India may have to suspend production due to a recent change in the country’s import policy, which is now forcing them to obtain licences before importing certain components that are crucial to handset manufacturing.
After the policy change earlier this month, customs have reportedly held up shipments of components such as flat panel displays and camera modules for smartphones.
Handset manufacturers are now bracing for the impact at a time when they have just started to emerge from the global supply chain-related challenges and several lockdown-included restrictions since 2020.
India’s Directorate General of Foreign Trade (DGFT) issued a notification on February 9 which changed the status of specific components previously classified as “Free” to “Restricted”. That means handset manufacturers now have to get authorization or a licence from the DGFT to import components like camera module and flat panel display modules that they previously didn’t need permission to import.
According to a report by the Economic Times, handset makers have said that the order notifying the change in the import policy was issued without any consultation from the industry and without any prior warning that such a change was being considered.
Handset makers have raised the issue with the country’s Ministry of Electronics & Information Technology (MeitY) and sought MeitY secretary Ajay Prakash Sawhney’s intervention.
The India Cellular and Electronics Association (ICEA) said in a letter to MeitY that the industry “can ill afford such a disruption” given the huge amount of production and the importance of exports to the economy.
“India is the world’s second largest producer of mobile phones. Thanks to the PLI scheme, exports have started to pick up and have already touched $3.34 billion in this year,” Pankaj Mohindroo, chairman, ICEA said in the letter to the MeitY secretary.
“We are on an ambitious journey to build $300 billion electronics manufacturing with an export contribution of $120 Billion by 2025-26. Stability and predictability of the policy regime is very important to achieve this vision,” Mohindroo added.
The ICEA represents top smartphone makers such as Apple, Oppo, Vivo, Xiaomi, Lava and contract manufacturers like Foxconn, Pegatron, Wistron and Flex.
The ICEA has also said that due to the import policy, all brands can’t even import flat panel display modules for service and warranty needs because the companies are not the end user.
“This would disrupt the business and would be detrimental to the consumers/customers,” Mohindroo said.
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