MeitY in talks with FinMin for tariff adjustments to boost mobile manufacturing

Mobile manufacturing in India

The Ministry of Electronics and Information Technology (MeitY) is discussing with the Finance Ministry to address the high tariffs on imported components causing concerns within the mobile phone manufacturing industry.

The MeitY understands these tariffs' detrimental impact on domestic and export demand, hurting overall growth, MeitY sources told Moneycontrol, adding that the ministry has already raised the handset industry's concerns with the Finance Ministry ahead of the upcoming vote-on-account Budget.

The ministry is currently taking steps to establish an environment that promotes export growth and ensures the Indian mobile manufacturing industry remains competitive on a global level, said MeitY sources, highlighting the need for rationalisation and a potential reduction in tariffs to facilitate incremental production.

The Indian Cellular and Electronics Association (ICEA), in its recent report, highlighted that India has the highest tariffs on inputs in electronics manufacturing, which contradicts the government's policy objectives of building a local ecosystem and increasing domestic value addition.

In its report, ICEA recommended reducing customs duty for mobile component imports. The report argued that a reduction in Customs duty could unlock incremental exports of 44%. ICEA represents global brands like Apple and Foxconn and local companies like Dixon and Lava.

ICEA report further noted that India has the highest import duties on inputs compared to seven countries, including Vietnam, China, and Mexico.

The ministry also wants the Chinese handset makers to start exporting from India. "The point is, we are already selling whatever we make in India. Indian market is saturated already in terms of demand, and if you want to grow, you (Chinese companies) need to export," a ministry source said.

The person said that the next logical step for these Chinese manufacturers is to concentrate on increasing exports from India.