As per a government notification on January 30, import duty for components used in the mobile phone manufacturing has been slashed from 15% to 10% by Centre.
Mobile Phone Components Import Duties to be Slashed to 10%
The components which shall see slashed import duties includes battery enclosures, primary lenses, rear covers, and various mechanical components made from a combination of plastic and metal, SIM socket. Various sectors such as manufacturing as well as exports are expected to benefit from these latest reductions.
IT minister, Ashwini Vaishnaw said that “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.”
On January 11, it was reported that the government officials were contemplating the reduction in import duties for crucial components for smartphone manufacturing. This move is said to further boost the operations of companies like Apple in India as well as boost India’s export prospects.
As per the report, the industry firms have been advocating the duty reduction on as many as 12 components that would in turn reduce the production costs of smartphones in India and well as make the environment more competitive in respect to neighbouring business rivals like China & Vietnam.
As per the Global Trade Research Initiative (GTRI), the government has been requested to not cut import duties to any such components since any such changes could further impact tariff structure eventually hurting the local manufacturing. As per the think tank, maintaining the current structure could balance the industry growth and long-term development in India’s growing smartphone market and said that Indian manufacturers “must pay” duties on smartphones sold within India, but exports should be exempted from such duties.
Reduction in Import Duty Cuts to Boost Domestic Production and Exports
On the contrary, the India Cellular and Electronics Association (ICEA) supported for the import duty cuts on mobile phone components so as to help increase domestic production of handsets, boost exports, and support indigenous manufacturing.
With the aim of boosting the upscale mobile phones production, Finance Minister Nirmala Sitharaman reduced the custom duty by 2.5% on various components of camera phones in the budget for 2023-24.
Notably, the export of Indian smartphones increased from $7.2 billion in 2022 to $13.9 billion in 2023. The mobile phone manufacturing sector is also one of the highest performing one when it comes to the nation’s flagship PLI (production linked incentive) scheme.
As per the reports from GTRI, over 98% of smartphones sold in India are made locally.
