image credit:-ET Telecom
The Indian government has reduced the import duty on several components used in mobile phone production from 15% to 10%. The components affected by the tariff cut include battery covers, front covers, middle covers, main lenses, back covers, and GSM antennas. This decision aligns with the government’s efforts to encourage more Indian companies to engage in local assembly of smartphones.
While some believe this may lead to a minor drop in smartphone prices, others suggest that the impact on prices might be insignificant. The move is seen as part of a broader initiative to enhance export-led growth and competitiveness in the industry. IT Minister Ashwini Vaishnaw stated that the rationalization of customs duties brings much-needed certainty and clarity to the industry.
The adjustment in the basic customs duty (BCD) applies to inputs of mobile phones, with mechanics and die-cut parts now at 10%, and other inputs classified under HSN code 85177990 set at 10% as well. Notably, there will be no duty on inputs of mechanics and die-cut parts. This shift in policy orientation aims to support export-led growth and increase competitiveness.
The move is expected to benefit original equipment manufacturers (OEMs) by reducing costs, potentially leading to a 3-5% drop in smartphone prices, particularly in the entry and budget segments. The Indian government’s focus on fostering a conducive environment for smartphone exports is seen as crucial amid global tensions, positioning the country as a significant player with a large internal market and a capable labour force for device production.
Despite the positive outlook, some critics argue that the duty cuts might not significantly improve the export competitiveness of mobile phones made in India. They point out that various government schemes already allow imports of inputs, parts, and components for mobile phone production at zero duty, and firms like Apple leverage these schemes.
The government is urged to ensure that any benefits from duty cuts are passed on to domestic buyers through price reductions. As the country aims to boost its smartphone exports, stakeholders stress the importance of creating a competitive tariff regime comparable to other leading manufacturing countries. The reduction in import duties on smartphone components comes just ahead of the annual Budget announcement, signalling the government’s commitment to supporting the growth of the mobile phone manufacturing sector in India.