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India to allow import of second-hand electronics at last; windfall for refurbished phones market?


Phone companies – Apple especially – could soon be posed to take a bigger bite out of India’s growing refurbished phones market, with the Directorate General of Foreign Trade (DGFT) allowing – via a notification on May 7 – the import of refurbished electronic goods, reports ET Prime. The caveat – and it’s a big one – is that the import of such goods will remain subject to clearance from the DGFT and the Bureau of Indian Standards (BIS). Earlier, the government’s stated policy was to ban second-hand goods altogether but until now there were no definitive rules on the import of refurbished goods, the report said. To add to the confusion, buying and selling second-hand goods is legal in India. The report also voiced the concerns of policy experts, who said the new notification would change nothing as the BIS would not issue approvals “come what may”.

What the notification does

The notification (read it here) amends the government’s import policy, and for the first time specifically mentions second-hand goods. It also makes changes to the Indian Trade Clarification based on Harmonised System of Coding – IT (HS) – a system involving eight-digit codes that is used by Indian customs. The new rule reads (emphasis ours):

“The import of goods (new as well as second-hand, whether or not refurbished, repaired or reconditioned) notified under the Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012… is prohibited unless they are registered with the Bureau of Indian Standards and comply with its labelling requirements, or on a specific exemption letter from the Ministry of Electronics and Information Technology (MEITY) for a particular consignment. The importer shall re-export such prohibited goods reaching Custom Ports, or Customs Authorities shall deform the goods beyond use and dispose of them as scrap after intimating MEITY.”

Additionally, the notification also amends the section on ‘Second-hand Capital Goods’ under the Foreign Trade Policy. The import of desktop computers, refurbished parts of personal computers including laptops, and all electronic and IT goods notified under the Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012, which was earlier restricted, will now be allowed subject to authorisation.

India’s market for refurbished phones grew 14% last year

If the government is actually serious about allowing the import of second-hand electronic goods, phone makers and platforms that deal in refurbished goods could be in for a windfall. India’s market for refurbished phones grew by 14% to 14 lakh phones even as the sale of such devices worldwide fell for the first time in 2018, per The Week. While Apple has a decent chunk of this market (find data) its overall market share in India remains minuscule, and is falling. The company’s market share in India fell to about 1% last year from about 2% in 2017, per Forbes. On the other hand, Chinese brands such as Xiaomi and Oppo dominate India’s smartphone market but have failed to similarly dominate the second-hand market, thanks to the demand for second-hand iPhones, which retain their value for longer and continue to be enthusiastically recommended. Second-hand phones most in demand in India are those from Samsung, Apple and Xiaomi, The Week’s report says.

India is especially attractive to phone makers looking to sell second-hand devices as millions of people continue to switch from feature phones to smartphones every year, and many cannot afford a brand-new handset. A report by the International Data Corporation released earlier this week said India’s feature phone market, which still accounts for half of all mobile phone shipments, saw 32.3 million units shipped in Q1 2019 – a sharp decline of 42.4% year-on-year.

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Amazon, Flipkart and Snapdeal all sell refurbished phones on their platforms, and last August Flipkart launched 2GUD, an online marketplace for refurbished electronics, after shuttering the operations of eBay India. There is also Cashify, an online resale marketplace for used electronics including smartphones, laptops, TV sets and gaming consoles, which was set up in Gurgaon in 2013. Last July, it raised Series C funding of $12 Million in a round from a clutch of Chinese investors and existing investors.

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