Govt cuts import duty on mobile phone components

The import tax duty on mobile phone components has been reduced from 15% to 10%, the finance ministry announced a day ahead of the interim budget. 

The government has also adjusted the basic customs duty to 10%, providing a significant relief to mobile phone manufacturers in the country.

Press Insider had earlier reported how mobile phone manufacturers were losing out to Chinese and Vietnamese competitors due to high import tax on input. 

India Cellular and Electronics Association (ICEA) argued that rationalizing import duty tax would boost the country’s phone exports to $39 billion in 2027 from $11 billion in 2023 and almost double domestic phone production from $44 billion in 2023.

As per the notification issued by the government, import duty on mobile phone components like mechanics and die-cut parts is 10%, and inputs of mechanics and die-cut parts are 0%. 

All other inputs of mobile phones are taxed at 10%.

The industry lauded the government for a critical and welcome policy intervention a day before the presentation of the interim budget. 

ICEA chairman Pankaj Mohindroo said the rationalization of duty on mobile component imports is the start of a paradigm shift in the policy orientation towards export-led growth and competitiveness. 

“Building scale, riding on low input tariffs is key to transforming India into a global hub for electronics manufacturing and exports,” he added.

The finance ministry notification on 30 January states that the import duty on phone components like battery covers and crucial parts such as primary lens, GSM and other antennae, and SIM sockets have been reduced to 10% from the earlier rate of 15%. 

Duty on mechanics and die-cut parts, including resin, mesh, and adhesive sponge, has been dropped to 0% from the earlier rate of up to 7.5%. Similarly, the duty on die-cut parts on conducive cloth, LCD conducive foam, and LCD foam has been cut to 10% from 15%.

Indian mobile manufacturers had earlier voiced their concerns about high basic custom duty (BCD) on components classified as ‘Others’, which was raised to 15% from 5% in 2018 under the phased manufacturing programme (PMP). 

Manufacturers had claimed that the rise in BCD had led to issues of misinterpretations and created inadvertent complications for the mobile phone industry.

According to mobile phone manufacturers, the high import tax was proving counterproductive for them to achieve export-led growth for mobile phone manufacturers. 

Due to production-linked incentive schemes, electronics has emerged as the 5th largest category among the different export categories in India, with mobiles constituting 52% of overall electronics exports.