India’s Excise Duty Increase On Mobile Phones Won’t Have Much Impact

 

On February 28, 2013, India (as part of its 2013-2014 budget) announced that it would increase the excise duty on mobile phones costing more than $36 to 6%, up from the current level of 1%. Forrester believes that this increase will not affect the mobile industry in India very much because:

  • Sub-$100 smartphones will trigger new kinds of competition in the market. As high-end mobile phones get more expensive, Forrester predicts that smartphones costing less than $100 will be in much greater demand. Moreover, handset manufacturers will absorb a large portion of the price increase to sustain their sales.
  • Explosive mobile Internet growth. With increasing urbanization and improving per capita income, more people will begin to use the Internet, and the use of smartphones will rise quickly. We forecast that the mobile Internet user base in India will grow by more than 30% year-on-year over the next five years.
  • Addicted social media youngsters. With more than 61 million Facebook users, India ranks as Facebook’s third-largest audience in the world after the US and Brazil. Half of these users are between 18 and 24 years of age, and the majority of them use their mobile phones to connect to the world.
  • Rapid eCommerce growth complementing the mobile sector. Forrester estimates that eCommerce revenues in India will increase more than fivefold by 2016, jumping from US$1.6 billion in 2012 to US$8.8 billion in 2016. Mobile-friendly sites from various players and eCommerce website aggregators will help accelerate mobile Internet adoption.

 

What It Means For CIOs: Continue to Build Your Mobile Strategy on Systems Of Engagement

Mobile devices are not merely another chapter in the “smaller, faster, cheaper” device story. Today, mobile devices are transferring power to individuals in their moments of action, and mobile experiences built on “systems of engagement” are a trigger point in transforming how organizations serve their employees, customers, and partners. CIOs should focus on building mobile applications that can empower individuals to take the next most likely action, as it will help drive explosive growth in engagement. While developing their mobile strategy, CIOs should keep the following points in mind:

  • Mobility investments are highly business-focused. Today, mobility is more a business priority and a challenge for organizations to address; CIOs need to ensure that their mobility investments are driven by business outcomes.
  • Mobile initiatives are strategic, not operational. CIOs should view mobility investments as strategic investments that will help their organizations gain competitive edge and improve their top-line growth.

The business case for mobility investments is so appealing that CIOs and their organizations just can’t ignore the mobile channel anymore. Recently, I published a blog post highlighting the fact that Indian CIOs are increasing their mobile software investments. To begin, we believe CIOs and the business should hire a chief mobility officer (CMOO) to create a mobile engagement guide and develop a mobile app architecture blueprint for their organizations.

Dane Anderson and I will be conducting invitation-only CIO mobility roundtables in India in April 2013 (April 17 in New Delhi and April 19 in Mumbai). The theme of the roundtable is “The Mobile Customer Engagement Imperative For Indian CIOs.” If you are interested in attending any of the two roundtables, please drop a note to nagarwal@forrester.com expressing your interest.