Import duty cut on handset parts brings certainty, clarity for industry: Ashwini Vaishnaw

Ashwini Vaishnaw

Communications and IT minister Ashwini Vaishnaw said that the decision to rationalise the customs levy on components used in manufacturing mobile phones has brought "much-needed certainty and clarity" for the industry and in the duty processes.

"I thank the prime minister and the finance minister for this step towards strengthening the mobile phone manufacturing ecosystem," Vaishnaw said in a statement.

Customs duty charged on residuary category or others applicable to
goods for use in the manufacturing of mobile phones have been reduced from 15 percent to 10 percent.

Several items used in manufacturing mobile phones, which were considered “others” and charged at 15 percent, will now be charged at 10 percent. Customs duty on inputs or parts for manufacturing goods specifically listed in these notifications has been reduced to zero.

“This is a critical and welcome policy intervention by the government towards making mobile manufacturing competitive in India. Building scale and riding on low input tariffs is key to transforming India into a global hub for electronics manufacturing and exports," said Pankaj Mohindroo, chairman of the Indian Cellular and Electronics Association (ICEA).

Mohindroo said that electronics has improved from the ninth position a few years ago to be the fifth largest export category for India in 2024. "Mobiles constitute over 52 percent of electronics exports, thanks to the PLI scheme. This is the first industry to leap from import substitution to export-led growth within the last eight years."

ICEA, which represents players like Apple, Foxconn, and Dixon, recently said that India's tariffs on electronics inputs were the highest among competing economies. It had asked the government to rationalise tariffs or import duties to reduce disadvantages and increase competitiveness with rivals like Vietnam and China.

The industry body then said in its study and a statement that the Department of Revenue, under the Ministry of Finance, which takes the call on levying tariffs, must create a glide path for input duties to match those of Vietnam and China over the next two years.

Experts said that the move to slash import duty for components used in manufacturing mobile phones to 10 percent from 15 percent earlier may allow handset makers to slash prices in the entry or budget smartphone segment.