A view of a production line of a smartphone factory in India. Photo: VCG

 
A 10-15 percent basic customs duty imposed by India on mobile phone display assembly posed a challenge to Chinese mobile phone makers in the country, an industry insider has claimed.
Following the Indian government's continuous crackdown on Chinese mobile phone companies, it is yet another move to politicize normal commercial exchange, a Chinese executive based in India told the Global Times on condition of anonymity on Sunday.
Chinese smart phone brands will be affected by the customs duty the most, as it seeks to force Chinese smartphone component companies to set up plants in India and secretly increase the cost of Chinese smart phone makers which typically import components and assemble them in India, the source said.
According to the Central Board of Indirect Taxes and Customs, import of display assembly of cellular mobile phones along with back-support frames will attract a basic customs duty of 10 percent, but if other items such as the antenna pin and power keys are imported along with the display assembly, the duty on the whole assembly will be 15 percent, local media reported Friday.
Chinese companies will be hit the most by the customs duty, as they form up nearly 70 percent of the local market, the industry insider pointed out.
The circular comes at a time when Indian tax authorities are probing some major Chinese smartphone companies over alleged tax aversion.
India has stepped up its crackdown on Chinese firms over recent years. It has banished more than Chinese 300 apps, including Tencent's WeChat and ByteDance's TikTok, according to media reports.
Xiaomi, the top selling brand in India, told investors on a teleconference that it is coping with the Indian government probe actively and has successfully unfrozen funds worth of $700 million and is in negotiation for the unfreezing of the rest of the fund via both candid communications with the Indian government and the legal system, according to thepaper.cn. 
Xiaomi's overseas market revenue, at 34 billion yuan ($4.99 billion) in the quarter, accounts for 48.4 percent of its total revenue.
High tariffs and tax dispute have become the two leading factors of a wave of foreign company exodus from India, analysts said.