Key Points
Vietnam, the worlds second-biggest exporter of handsets after China, sources these and most other components at zero tariffs from free-trade partners..
Making mobile phones in the worlds most-populous nation now comes embedded with a cost disadvantage of 4%, says the 2023 edition of a comparative study of tariffs by India Cellular & Electronics..
The official view is that as long as exporters can claim back the duties on imported components, they wont grumble about Indias cost disadvantage against Vietnam not when theyre being paid generous PLI incentives...
Add the impact from the rupees 11% slide against the dollar since the start of last year double the decline in the Vietnamese dong and Indian-made phones would be uncompetitive by more than 4%, the ICEA says.. This cost may not be showing up in export performance because it is being borne by Indias 1.4 billion consumers..
Raghuram Rajan, a University of Chicago economist and a former governor of the Indian central bank, has shown that after adding major parts that go into phones, the country may have become a bigger net importer than before...
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