FM Nirmala Sitharman proposes reduction in basic custom duty to 15% on mobile phones, PCB and chargers

phone

Finance Minister Nirmala Sitharman proposed reducing the basic customs duty on mobile phones, mobile PCBAs, and mobile chargers to 15 percent from 20 percent in her Budget speech 2024 on July 23.

"With a three-fold increase in domestic production and almost a 100-fold jump in exports of mobile phones in the last six years, the Indian mobile industry has matured. In the interest of consumers, I now propose to reduce the basic customs duty (BCD) on mobile phones, mobile PCBA, and mobile chargers to 15%," Sitharaman said while presenting the Union Budget 2024-25 in Parliament.

"To increase value addition in the domestic electronics industry, I propose to remove the BCD, subject to conditions, on oxygen-free copper for manufacture of resistors. I also propose to exempt certain parts to manufacture connectors," she said.

The handset and electronics makers sought to rationalise the import duty structure and reduce the duties on components of mobile phone parts or sub-assemblies over time to attract global value chains to India and enable them to create manufacturing at scale.

They said the move would help the company compete with China and Vietnam, which currently have much lower and simplified input duty structures.

"We would like to congratulate the government for this landmark budget. Its intent and direction to enhance manufacturing and export competitiveness impressed us. The Finance Minister has also acknowledged the tremendous growth of mobile phone manufacturing and exports. We had recommended reducing BCD on mobile phones, its PCBA and Charger/Adapter by 15%, which has been accepted. The mobile and electronics industry is elated with the announcements and will go a long way to enhance manufacturing, exports and our competitiveness," Pankaj Mohindroo, chairman of ICEA, told Moneycontrol.

"Our proposal for tariff slab rationalisation has also been acknowledged, and FM has announced that it will be implemented in the next six months, further emboldening the industry and its competitiveness," he added.

The Indian Cellular and Electronics Association (ICEA) said input tariff reduction across categories will help India reach Vietnamese and Chinese levels by FY 2026-27, which will ensure the country's competitiveness, scale, and exports. India currently has one of the most complex tariff structures with multiple tariff slabs.

ICEA represents Apple, Foxconn, Dixon, Xiaomi, Oppo and Vivo.

"Reduction on BCD on mobile phone, PCBA and charger to 15% exude confidence in domestic manufacturing capability of the Indian mobile phone manufacturing eco-system, which has benefited through multiple fiscal interventions such as M-SIPS, SPECS and PLI Schemes. BCD on key parts of resistors and capacitors is a positive step, and the Industry has been seeking it since the introduction of SPECS," said Mayank Arora, Director at Nangia & Co.

To encourage domestic manufacturing and value addition, the minister has proposed increasing BCD by 10-15 percent on PCBA on specified telecom equipment.