In a move seen as benefiting new entrants, many of whom are Chinese companies, the ministry of environment and forests has eased targets for electronics makers, including handset companies, to collect e-waste equal to a share of their yearly sales.
As per the government rules notified late last March but effective October 2017, the life of a smartphone has been determined as five years, while that of a featurephone at seven years.
Accordingly, handset makers selling phones prior to five years or seven years have to collect e-waste equal to 10% of the sales done in the financial year five or seven years back, while those starting operations later will need to meet lower targets of 5%.
Earlier, the rules stated that older companies had to start with a target of 30% collection of the sales done in previous years, while new companies had to meet a target of collecting e-waste equal to 10% of the sales.
In effect, players such as Samsung, LG, Panasonic and Micromax will have to collect e-waste equal to 10% of smartphones sold in FY 2013-14, in the fiscal 2017-18, since they have been selling smartphones for more than five years in India.
The new e-waste collection targets, also known as the Extended Promoter Responsibility Plan, will rise by 10% every year for older companies until it hits 70% by FY24, and will stay at that level from that year onward. But for newer companies, the target for FY 2018-20 stays at 5% of the sales done in FY 16-18, rising to 10% in FY 2020-2022 for sales done in the consecutive financial years. This target again rises to 15% in FY 2022-24 and 20% from FY 2024 onwards.
The handset makers didn’t respond to ET’s emailed queries. Chinese players have taken a 54% share of the smartphone market since their entry in 2013.
Intex Technologies, one of the companies which started selling smartphones from 2012, said that the issue was contentious and courier and logistics may add to cost pressures. It aims to get large collection volumes from smaller cities to offset these costs.
“The rules will be easier to comply for newer players as per the definition of life of the product set by the ministry, since they have to meet a lower target than established players,” said Radhika Kalia, managing director of the India arm of RLG, a German recycling and reverse logistics player which works with global handset makers in India.
“This may skew the competition a little bit, given that if all companies were to set up e-waste management chains on their own, the costs could rise significantly,” she added.
She added that if companies were to work with a third-party provider, the cost of compliance would be negligible, not more than 1-2% of the value of a phone, which can be easily absorbed.
Pranshu Singhal, founder of Karo Sambhav, a collaborative producer responsibility organization which works with brands like Apple, Dell, HP and Lenovo, said the latest rules were much needed in the smartphone industry where companies keep coming and going due to hyper competition.
“Though the life of the smartphone is five years, we’ve seen industry trends where the companies have been in operation for two years and then have gone out of business. This regulation captures this aspect and takes away the risk of a company disappearing from the market and the product becoming orphan,” he said.