Day before Interim Budget, Modi govt slashes import duty for mobile phone components to 10%

Ahead of the Interim Budget, the Modi government has announced a significant cut in the import duty levied on mobile phone components. The move is aimed at boosting exports from Asia’s third-largest economy. According to news agency Reuters, the Centre has decided to slash import duty on parts used for manufacturing mobile phones to 10 per cent from 15 per cent.

The finance ministry announced a reduction in import duties for various components, including battery covers, main lenses, back covers, and other plastic and metal mechanical items, bringing the rate down to 10 per cent.

It was suggested in a recent report by Reuters that India was contemplating cuts in import duties for crucial components essential in the production of high-end mobile phones earlier this month.
In a recent report, the Global Trade Research Initiative (GTRI) has advised the government against reducing import duties on electronic components used in smartphone manufacturing in the upcoming Budget. The GTRI argued that the current tariff structure has already proven successful in supporting local manufacturing, and any changes could jeopardize the industry’s growth. The think tank suggested that maintaining the existing rates would strike a balance between industry expansion and long-term development in India’s growing smartphone market.

This recommendation contrasts with the India Cellular and Electronics Association’s (ICEA) call for import duty cuts on mobile phone components. The ICEA believes such cuts could boost domestic handset production by 28%, reaching USD 82 billion, stimulate exports, and strengthen indigenous manufacturing.

According to the GTRI report, Indian manufacturers should pay duties on smartphones sold within the country, while exports should be exempt from such duties. The report also highlighted successful policy interventions, such as the production-linked incentive (PLI) scheme, which contributed to India’s smartphone industry becoming a top performer. The PLI scheme offers cash incentives and supports local production of smartphones and their components.