Electronics industry seeks import duty reductions and incentives in Budget 2025: Report

These issues were raised during a pre-budget meeting with Finance Minister Nirmala Sitharaman on December 26.

The electronics industry has requested significant concessions in the upcoming Budget 2025, particularly in the form of reduced import duties on key components used in mobile phone manufacturing. The call for tariff reductions comes as the sector faces higher import duties compared to its regional counterparts, such as China and Vietnam.

According to a report by Economic Times, the industry has asked for a reduction in the import duty on components like inductor coils, microphones, and printed circuit board assemblies (PCBA). Phone manufacturers have specifically proposed a cut in the duty on microphones, receivers, speakers, and flexible printed circuit assemblies from 15 percent to 10 percent. They have also sought the elimination of the 2.5 percent duty on parts of printed circuit board assemblies, the ET report added.

India’s effective tariffs on mobile phone inputs range from 7 percent to 7.2 percent, which is significantly higher than those in China and Vietnam, the industry noted. These issues were raised during a pre-budget meeting with Finance Minister Nirmala Sitharaman on December 26.

The India Cellular and Electronics Association (ICEA) has also recommended a simplified tariff structure, advocating for duty-free imports of inputs and sub-parts, a 5 percent duty on certain component parts, and a 10% tariff on sub-assemblies and components, the report adds.

Moneycontrol could not independently verify the report.

In addition to tariff cuts, the industry has called for subsidies on mandatory testing and product certification. The Electronic Industries Association of India (ELCINA) has suggested that the government provide financial incentives for MSME companies, increase testing capacity, and establish subsidized testing and certification facilities.

Furthermore, the ET report also adds that the industry has pushed for an extension of the 15 percent corporate tax waiver for manufacturing companies until March 31, 2029, to encourage the establishment of new ventures in the component sector. ELCINA has also proposed a dedicated incentive package to support the creation of manufacturing clusters for components.

The domestic smartphone market in India has stagnated, with shipments remaining flat at around 152 million units in 2024, marking a second consecutive year of stagnant growth. The industry has stressed that a reduction in import duties on key components would be essential for India to remain competitive, especially as U.S. President-elect Donald Trump’s proposed tariffs on Chinese imports could escalate to as high as 60 percent.