In a significant move aimed at giving a leg up to the domestic electronics industry, Union Finance Minister Nirmala Sitharaman announced a major reduction in customs duty for several key electronic items in the Union Budget 2024-25 on Tuesday. The basic customs duty (BCD) on mobile phones, mobile printed circuit board assembly (PCBA), and mobile chargers has been reduced from 20% to 15%.
The move is expected to make smartphones more affordable for consumers, which can be considered a good sign for the ‘Made in India’ manufacturing sector.
The decision comes in light of the substantial growth in domestic production and exports of mobile phones over the past six years. “With a three-fold increase in domestic production and almost a 100-fold jump in the export 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%,” she said in her speech.
In addition to the reduction in BCD for mobile-related components, the FM proposed the removal of BCD on oxygen-free copper, used in the manufacture of resistors, subject to certain conditions. She also announced exemptions for specific parts used in the manufacture of connectors. These measures are intended to enhance value addition within the domestic electronics industry and make Indian manufacturing more competitive on a global scale.
The announcement has been welcomed by handset and electronics manufacturers, who have long advocated for a rationalised import duty structure to attract global value chains and enable large-scale manufacturing in India.
Pankaj Mohindroo, Chairman of the India Cellular and Electronics Association (ICEA), expressed his satisfaction with the budget, stating: “We would like to congratulate the government for this landmark budget. We are impressed with its intent and direction focusing on enhancing manufacturing and export competitiveness. 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 to 15%, which has been accepted. The mobile and electronics industry is elated with the announcement and will go a long way to enhance manufacturing, exports, and our competitiveness. Our proposal for tariff slab rationalisation, which has also been acknowledged, will further embolden the industry and its competitiveness.”
A. Gururaj, Managing Director, Optiemus Electronics Ltd, said, “With the substantial expansion of the electronics manufacturing industry, the demand for a skilled workforce has become paramount. The announcement of various skilling initiatives and the scheme to incentivise additional employment in the manufacturing sector, particularly for first-time employees, will provide essential support to industries reliant on skilled workforce, especially in electronics. Furthermore, the proposal to reduce the Basic Customs Duty on mobile phones, mobile PCBA, and mobile chargers to 15% is a positive step. The measures laid out to support the MSME industries in particularly welcome to create a much needed supplier base for electronics within India. These measures collectively send out a strong message on the manufacturing sector and related eco system in India.”
However, in addition, the government has allocated Rs 1,16,342 crore for the IT and telecom ministries, reflecting the ongoing commitment to strengthening India’s digital infrastructure. These measures are expected to enhance India’s position as a global manufacturing hub and support the growth of the domestic electronics industry, enabling it to compete more effectively with countries like China and Vietnam, which currently benefit from lower and more straightforward import duty structure.
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