Centre answers industry calls for duty reductions on components to reduce smartphone production costs in India.
The Indian government reduced import duties on components used in mobile phone manufacturing to 10% from 15%, ahead of the interim budget. This covers a range of components including battery enclosures, primary lenses, rear covers, various mechanical parts made from plastic and metal combinations, and SIM sockets. The move is expected to boost both manufacturing and export activities within the sector.
Industry firms have been advocating for duty reductions on around 12 components to reduce smartphone production costs in India, to have a more competitive environment against manufacturing hubs such as China and Vietnam.
The India Cellular and Electronics Association (ICEA) supported the idea of reducing import duties on mobile phone components to enhance domestic handset production, increase exports, and promote local manufacturing.
Despite these industry calls, the Global Trade Research Initiative (GTRI) had advised against cutting import duties on electronic components used in smartphones, arguing that any alterations to the current tariff structure could negatively impact local manufacturing. The think tank emphasised that duties should be applied to smartphones sold within India, while exports should remain exempt.
In the 2023-24 Budget, Finance Minister Nirmala Sitharaman eliminated a 2.5 percent customs duty on certain mobile camera phone components to encourage the production of high-end mobile phones in the country.
Smartphone exports from India grew to $13.9 billion in 2023 from $7.2 billion in 2022, making the sector one of the top beneficiaries of the government’s flagship Production Linked Incentive (PLI) scheme. Over 98 percent of smartphones sold in India are now manufactured locally, according to a report by GTRI.