Electronics industry seeks duty cuts, MOOWR reforms in Union Budget 2026–27 to boost manufacturing competitiveness

The industry has also sought the fixation of a standard wastage norm of up to 2% for mobile phone manufacturing, citing unavoidable process losses in high-volume, precision-driven electronics production

• ICEA urges customs duty cuts on electronics components in Budget 2026–27
• Industry seeks fixes for inverted tariff structures and operational bottlenecks
• Reforms aim to boost India's global competitiveness in electronics manufacturing

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India's electronics manufacturing industry has urged the government to rationalise customs duties, fix inverted tariff structures and ease operational bottlenecks in the upcoming Union Budget 2026–27, warning that existing anomalies are inflating costs and weakening India’s competitiveness as a global electronics hub.

In a detailed set of budget recommendations, the Indian Cellular and Electronics Associations (ICEA),  has called for targeted reductions in Basic Customs Duty (BCD) across mobile phone components, wearables, display assemblies and capital goods, along with reforms to the Manufacturing and Other Operations in Warehouse Regulations (MOOWR).

Duty rationalisation on mobile phone components

ICEA, which represents Apple, Foxconn, Xiaomi, Oppo, Vivo, Dixon and Jabil among others, has proposed cutting import duties on key mobile phone sub-assemblies such as microphones, receivers and speakers from 15% to 10%, arguing that while these components account for only about 1% of a handset’s bill of materials, higher duties cascade into higher finished-product costs. Aligning duties with other sub-assemblies, it said, would improve cost competitiveness and encourage deeper localisation.

The industry body has also sought a reduction in duties on Printed Circuit Board Assemblies (PCBAs) and Flexible Printed Circuit Assemblies (FPCAs) from 15% to 10%. PCBA manufacturing is already largely localised, with nearly all domestic demand met within India. ICEA estimates that the proposed cut would lead to negligible revenue loss, as around 70% of FPCA imports—worth roughly $800 million annually—are used for exports.

For the fast-growing wearables and hearables segment, ICEA has recommended lowering BCD on finished products from 20% to 15%, aligning them with India’s broader tariff rationalisation roadmap. It has also flagged inconsistencies in duties on mechanical parts used in wearables, seeking parity with mobile phone mechanics by reducing the rate from 15% to 10%.

A major concern highlighted is the inverted duty structure affecting display assemblies used in automobiles, medical devices and industrial electronics. Currently, both finished displays and key inputs attract 15% duty, offering little incentive for domestic assembly. ICEA has proposed a calibrated structure with 15% duty on finished display assemblies and zero duty on inputs and sub-parts, similar to the regime already in place for mobile phones and televisions.

Fixing inverted duties in advanced components

The industry has also flagged inverted tariffs on inductor coil modules used for wireless charging in smartphones, where inputs attract higher duties than the finished module. ICEA has proposed eliminating duties on parts and inputs while retaining the existing 10% duty on the finished coil module to support domestic manufacturing.

Similar concerns have been raised about capital goods used in mobile phone manufacturing. While finished equipment often attracts zero duty, components required to manufacture such machinery domestically face duties of up to 20%, incentivising imports over local production. ICEA has urged the government to extend zero-duty benefits to all components and sub-assemblies used in capital equipment manufacturing.

Classification clarity and operational reforms

Beyond tariffs, the industry has called for uniform customs classification of display assemblies under HSN 8524, irrespective of end use, to reduce disputes and uncertainty. It has also sought a separate tariff heading for Interactive Flat Panel Displays (IFPDs), arguing that their current classification alongside conventional monitors does not reflect technological differences.

On the operational side, ICEA has recommended reforms to the MOOWR scheme, including allowing depreciation on capital goods when cleared into the domestic market, extending RoDTEP benefits to MOOWR units, simplifying ex-bond clearance procedures and granting deemed AEO Tier-1 status to MOOWR units.

The industry has also sought the fixation of a standard wastage norm of up to 2% for mobile phone manufacturing, citing unavoidable process losses in high-volume, precision-driven electronics production.

ICEA said the proposed measures would reduce cost distortions, improve ease of doing business and strengthen India’s position as a competitive global manufacturing base amid rising geopolitical and supply-chain risks.