Handset makers and electronic gadget companies have urged the finance ministry to simplify the import tariff structure in the Union Budget for 2025-26 by bring the levy on parts, inputs, and sub-parts of sub-assemblies or components such as PCBAs, FPCs, camera modules, and connectors down to zero from 2.5 percent.
The India Cellular and Electronics Association (ICEA) stated that high tariffs on sub-assemblies and their components significantly increase the manufacturing costs, hindering India’s global competitiveness. The ICEA stressed on the need for a zero-tariff structure to bolster the sector.
“India’s current tariff regime is among the most complex globally, with multiple rates (0 percent, 2.5 percent, 5 percent, 7.5 percent, 10 percent, and 15 percent, plus surcharges). This complexity, especially in sub-assemblies and components, impacts global competitiveness and export potential,” said ICEA Chairman Pankaj Mohindroo. “We are confident that these measures will simplify the duty structure, enhance competitiveness, and drive investments, contributing to India’s journey towards becoming a global electronics manufacturing leader.”
In a recent letter, the ICEA shared its recommendations with Sanjay Malhotra, revenue secretary to the ministry of finance. Moneycontrol reviewed a copy of the letter.
The association also urged the ministry to categorise FPCBAs under a new HSN Code at 10 percent duty. FPCBAs are now classified as PCBAs, though their functionality is more aligned with connectors.
To support domestic television manufacturing, the ICEA recommended reducing the duty on sub-assembly inputs for open cells to 0 percent. It said the current 2.5 percent tariff on inputs affects the competitive edge and discourages local production due to an insufficient differential duty.
The ICEA also sought rationalisation of duties on components for hearable or audio devices to support the emerging domestic industry. “The ICEA recommends retaining the existing duty rate on all components and inputs used in hearables and deferring the duty increase outlined in the 2025-26 PMP, as the domestic industry is still in its growth phase,” the association stated.
This measure would provide the necessary time for domestic production to scale up and for the supply chain to mature. Mohindroo said it would also help reduce costs and address rapid technological advancements and frequent product modifications.
The association further highlighted the need to address inverted and convoluted duties on inductor coil modules, stating that the current structure increases costs, complicates customs processes, and causes clearance delays, ultimately impacting the supply chain efficiency.
The body also suggested easing the levy on car display inputs from 15 percent to zero. This, and similar duties on parts like BLUs, cover glass, and open cells, create an inverted and convoluted duty structure, reducing cost-effectiveness.
“Display manufacturing is similar across segments. To encourage and build scale for display assembly manufacturing in India, all inputs for display assembly, irrespective of the end use, should be at zero duty to align with the duty structure of mobile phone displays,” the ICEA said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
