Basic import duty on certain phone components scrapped

India scraps 2.5% duty on smartphone components to boost exports, with industry welcoming the move for cost competitiveness.

The basic customs duty of 2.5% imposed on certain smartphone components has been scrapped, following a glide path recommended by the electronics manufacturing industry last year. Mobile phones are fast emerging as India’s top export commodity, reaching $15.6 billion last year. Slabs for components had been “rationalised”, IT Minister Ashwini Vaishnaw told presspersons after the Budget presentation.

“The rationalisation of tariffs on key inputs and components creates a more competitive cost structure and encourages deeper integration with global value chains,” said Pankaj Mohindroo, Chairman of the India Cellular and Electronics Association (ICEA), which represents electronics manufacturing and assembly firms. 

The customs duties on components such as printed circuit board assemblies (PCBAs), camera modules, connectors, wired headsets, microphones, USB cables, fingerprint scanners were “nuisance duties”, Mr. Mohindroo had complained last year, adding that they did not contribute significantly to promote domestic manufacturing. Reduction in tariffs for key minerals was also welcome, Mr. Mohindroo said.

“Tariff protection was required in the infancy of manufacturing but now the tariffs are no longer valid in the mobile phones case,” the ICEA said. “The industry has reached a gigantic scale of ₹60 billion in annual production.”

Additionally, Mr. Mohindroo welcomed the changes in the income tax regime, saying that having zero income tax up to ₹12 lakh in annual income would boost demand for electronics.