A day prior to the interim budget announcement, India has decided to reduce the import duty on spare parts used in mobile phone manufacturing, such as battery covers, lenses, and SIM sockets, from 15% to 10%. This move is aimed at promoting local production, boosting exports, and potentially reducing prices in the domestic market.
The finance ministry officially notified the duty cut on January 30 for all goods used in the manufacture of cellular mobile phones, including components like battery covers, front, middle, and back covers, main lenses, screws, SIM sockets, and other mechanical items.
Telecom Minister Ashwini Vaishnaw expressed optimism about the impact of this duty rationalization, stating that it would strengthen the mobile phone manufacturing ecosystem. He emphasized that such customs duty measures bring much-needed certainty and clarity for the industry.
However, industry experts have varied opinions on the potential effects of this duty cut. GTRI Co-Founder Ajay Srivastava suggested that the move may not significantly improve the export competitiveness of mobile phones made in India since key inputs and components for exports already enjoy zero duty under various government schemes like SEZ and Advance Authorisation.
Srivastava also cautioned that the government should monitor whether the benefits of duty cuts are passed on to domestic mobile phone buyers through price reductions.
Pankaj Mohindroo, Chairman of the Indian Cellular and Electronics Association (ICEA), praised the government's decision as a critical policy intervention to enhance the competitiveness of mobile manufacturing in India. He highlighted the sector's growth, with mobiles constituting over 52% of electronics exports.
Khushbu Trivedi, Associate Director at Nangia Andersen India, noted that the reduction in import duty on mobile components aims to boost indigenous assembly and create a level playing field for Indian companies globally. Display assembly parts for LCD panels also saw a reduction in duties to 10% for better alignment.
Ankur Gupta, SW India Practice Leader for Indirect Tax, emphasized India's strategic efforts to limit the import of mobile phone components as finished products. He highlighted the government's focus on importing raw materials to stimulate domestic manufacturing, citing the implementation of the Production Linked Incentive (PLI) scheme as a pivotal step to incentivize manufacturers in the mobile phone industry.
(With Agency Inputs)