30 Under 30 2024

Import duty for mobile components slashed to 10 percent

The policy change will enable export-led growth and will make smartphones cheaper, especially in the entry and budget segments

Naini Thaker
Published: Jan 31, 2024 04:43:27 PM IST
Updated: Jan 31, 2024 06:36:07 PM IST

Import duty for mobile components slashed to 10 percentThis is an important policy change towards export-led growth, and is expected to help scale up mobile manufacturing in India. Image: Udit Kulshrestha/Bloomberg via Getty Images

Earlier today, the Finance Ministry announced that the import duties on components required for mobile phones have been cut from 15 percent to 10 percent. As noted in the Gazette released by the ministry, the lowered import duty will apply to components such as battery cover, back cover, SIM socket, main lens, side key, among other mechanical items.

This is an important policy change towards export-led growth, and is expected to help scale up mobile manufacturing in India. “Building scale, riding on low input tariffs is key to transforming India into a global hub for electronics manufacturing and exports. Electronics has improved from the 9th position a few years ago to India’s 5th largest export in 2024. Mobiles constitute over 52 percent of electronics exports thanks to the PLI Scheme. This is the first industry to leapfrog out of import substitution to export-led growth within the last eight years,” says Pankaj Mohindroo, chairman, India Cellular And Electronics Association (ICEA).

Adds Sunil Vachani, co-founder and chairman, Dixon Technologies, one of the India’s leading electronics manufacturer and the president of CEAMA, (Consumer Electronics and Appliances Manufacturers Association): “The industry has been requesting this, because we needed to have a custom duty structure which makes the Indian industry competitive and one where the highest tariff is for the finished product, and then a difference of at least 10 percent between the finished products and the inputs.” As for exports, he explains, “when duties are high, they get passed on for exports as all Tier 2 and Tier 3 suppliers do not have access to refund of duties. So lower duty structure definitely helps Indian industry become more competitive, globally.”

Import duty for mobile components slashed to 10 percent

This move is likely to benefit OEMs in reducing costs as well, which might eventually be passed on to the end customer. Says Prachir Singh, senior analyst, Counterpoint Research, “This move can help drop smartphone prices by 3-5 percent, empowering the consumers and making the devices affordable, especially in the entry and budget segments. These segments were the worst hit by the currency fluctuations and have witnessed price-rise in the past one year. We can expect the entry-tier and budget segments to have a positive impact and witness growth in the coming quarters.”

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