Ahead of Budget, Centre lowers import duty on mobile phone parts to 10%

Budget 2024 Expectations LIVE: FM Nirmala Sitharaman is set to present the Interim Budget for this year on February 1, 2024.

Centre has slashed import duty for components used in the manufacture of mobile phones to 10 percent from 15 percent earlier, according to a government notification on January 30.

These components include battery enclosures, primary lenses, rear covers, and various mechanical components made from a combination of plastic and metal, SIM socket. The latest reduction is expected to benefit the sector in terms of manufacturing as well as exports.

Commenting on the decision,  IT minister Ashwini Vaishnaw said, “This rationalization of custom duties brings much needed certainty and clarity for the industry and in customs processes. I thank Hon’ble PM & FM for this step towards strengthening the mobile phone manufacturing ecosystem.”

Early this month, on January 11, Reuters had reported that the Central government had been contemplating reductions in import duties for crucial components essential in the manufacturing of premium mobile phones, citing two government officials. This move is anticipated to benefit companies like Apple and boost India's export prospects.

According to the report, firms in the industry have been advocating for duty cuts on approximately 12 components to lower the production costs of smartphones in India and create a more competitive environment against neighboring rivals like China and Vietnam.

The Global Trade Research Initiative (GTRI) as recently as on January 22 had urged the government to not cut import duties on electronic components used in making smartphones as any changes to the existing tariff structure could hurt local manufacturing. The think tank added that maintaining the current rates would help balance industry growth and long-term development in India's growing smartphone market.

The think tank said Indian manufacturers "must pay" duties on smartphones sold within India, but exports should be exempted from such duties.

However, the India Cellular and Electronics Association (ICEA) had batted for import duty cuts on mobile phone components to help increase domestic production of handsets, boost exports, and support indigenous manufacturing.

In the Budget for 2023-24, Finance Minister Nirmala Sitharaman removed a 2.5 percent customs duty on specific components of mobile camera phones with the aim of boosting the production of upscale mobile phones within India.

Exports of Indian smartphones increased to $13.9 billion in 2023 from $7.2 billion in 2022. The sector is also one of the top performers for the flagship PLI (production linked incentive) scheme and over 98 percent of smartphones sold in India are made locally, the GTRI report added.

Finance Minister Nirmala Sitharaman will unveil the interim Budget for FY25 on February 1.