SUMMARY
The Ministry of Electronics and Information Technology is in the process of drafting a proposal for reduction in import tariffs
The final decision on the issue will be taken by the finance ministry while finalising the Union Budget
Earlier this week, the Indian Cellular and Electronics Association demanded a reduction in tariffs on components and subassemblies imported for making smartphones in India
The union government is reportedly mulling a proposal for slashing import duties on high-end smartphone components.
The Ministry of Electronics and Information Technology (MeitY) is in the process of drafting a proposal for the same which will likely be included in the Union Budget 2024-25, Reuters reported citing government officials.
While there is no clarity on the overall size of the incentives, a government official reportedly said that camera parts for high-end phones could be included in the proposal.
The final decision on the issue will be taken by the finance ministry after finalising the Budget, which is slated to be announced on February 1.
Implementation of import duty cuts on mobile phone components will address the demand of the country’s electronics industry. Earlier this week, the Indian Cellular and Electronics Association (ICEA), whose members include the likes of Apple, Vivo, and Oppo, released a seven-country study which showed that India imposes the highest tariffs on input components.
The study pointed out that India’s average import tariffs stand at 8.5%, much higher than China’s 3.7%.
The ICEA urged the government to reduce the number of import tariff slabs on mobile components from seven to three – 0%, 5%, and 10%. The association also urged the government to reduce import duties on components like camera modules and chargers, which are taxed in the range of 2.5% to 20% currently.
The Indian government has been actively promoting local manufacturing and value addition in the country through initiatives such as Make in India and production-linked incentive (PLI) schemes.
These schemes aim to boost the domestic production of goods, with an eye on turning India into a major export hub of electronics manufacturing. In the Union Budget 2023, Finance Minister Nirmala Sitharaman announced that the customs duty on camera lenses would be brought down to 2.5% to spur local manufacturing.
Overall, the import dependency of India’s domestic smartphone manufacturing industry fell to just 4% of revenue in 2022-23 from 78% in 2014-15.
In November last year, Union Minister Ashwini Vaishnaw said more than 99% mobile phones used in India are being locally made.
The local industry is expected to manufacture nearly $50 Bn worth of mobile phones in FY24. Further, India’s smartphone exports also rose to $11.1 Bn in FY23. The industry expects this number to surge to $15 Bn in the year ending March 2024.
Meanwhile, premium smartphone makers, including Apple, continue to scale up their production in the country. India emerged as the world’s second largest manufacturer of mobile phones in 2023, with Apple manufacturing iPhones worth INR 1 Lakh Cr in India during the year. It is also planning to ramp up production by more than five times from the current levels to around $40 Bn by 2027.
Another tech major, Google, also recently revealed its plans to manufacture Pixel smartphones in India.
