India’s Corporate Tax Cut To Boost Smartphone Manufacturing

India’s lower corporate tax rate will help its smartphone industry expand, fuel research and development (R&D) investment and attract higher-value component makers to the world’s second-biggest smartphone market, four top industry executives said.

India slashed its headline corporate tax rate to 22% from 30% on Friday in a surprise gambit aimed at wooing manufacturers and boosting investment in Asia’s third-biggest economy, where unemployment has surged as growth sinks to six-year lows.

The country is currently vying with rivals like Vietnam to attract global firms such as Apple and encourage contract manufacturers like Foxconn and Wistron to step up their presence. China’s trade tussle with the United States, which is pushing smartphone makers to seek alternative markets, is giving that fight an additional edge.

“This is a clear signal from the government to boost investors’ confidence in India’s economy,” said Vikas Agarwal, India head of China’s OnePlus, which makes its smartphones locally and rivals Apple for a share of India’s premium device segment. “It will directly affect a company’s profitability, help fuel consumption – but more importantly it also reflects India’s ambitions,” he said.

The trade war between Beijing and Washington has led to higher tariffs on goods worth tens of billions of dollars and disrupted global supply chains, pushing companies to look at newer markets to escape higher tariffs.

And India has already begun stepping up efforts to attract investment, especially in labour-intensive electronics manufacturing.

New Delhi last week scrapped a tax on imports of open cell TV panels, used to make television displays, in a move likely to boost television manufacturing in the country.―Business Today