Centre slashes import duty on mobile phone components from 15% to 10%

This comes just a day before the Centre is scheduled to announce its Interim Budget 2024 in Parliament

In a bid to boost exports, the Ministry of Finance announced late on Tuesday that it is reducing the import duty on parts used to manufacture mobile phones to 10 per cent from 15 per cent earlier.

According to the notification, the components on which the duty has been reduced include battery covers, main lens, GSM Antenna, SIM socket, screw, back cover, and other mechanical items of plastic and metal, among others.

This comes just a day before the Centre is set to announce its Interim Budget 2024 in the Parliament.

Notably, several companies had been pushing for duty cuts on over a dozen components, to reduce the cost of making mobile phones in India. The companies said that it would level the playing field with competitors like China and Vietnam.

 

According to the industry body India Cellular and Electronics Association (ICEA), import duties on mobile phone components in India, such as camera modules and chargers, currently range from 2.5 per cent to 20 per cent.

It also said that India levies the highest tax among six comparable manufacturing nations, including China, Vietnam, Mexico, and Thailand. "Unless they are lowered, India's mobile phone exports growth could slow down," it said.

Moreover, the exports from India have been increasing. In 2022-23, the exports of mobile phones doubled to $11.1 billion as compared to 2021-22. According to a report by Reuters, the industry expects exports in 2023-24 to rise to $15 billion. As of August, the number has already touched $5.5 billion. 

Apart from Apple, mobile phone exporters in India include South Korea's Samsung and China-based Xiaomi. Apple iPhones are currently assembled in India. Soon, the company may also start producing iPad and AirPods here, to move away from China. 

"The Indian government's tariff cut on mobile phone parts is a positive move, potentially boosting domestic production and enhancing India’s export competitiveness," said Prabhu Ram, head (Industry Intelligence Group) at CyberMedia Research. 

"While complete self-sufficiency remains unrealistic, prioritizing lower tariffs to scale up production is welcome. This could incentivize other smartphone brands to prioritize exports from India, aligning with the policy vision of making in India for the world."

Ankur Gupta, practice leader (Indirect Tax) at SW India added, "With mobile phone exports surpassing the $10 billion mark, minimising reliance on imports and nurturing local capabilities is imperative for India to establish a commanding presence in the global supply chain for cellular mobile phones, reinforcing its position as a key player in the international market."

According to Ram, the immediate impact on final prices of the mobile phones is unknown yet as only basic components are covered in the notification.