Will the Union Budget ease customs duties to sustain India’s electronics manufacturing push, as industry seeks tariff fixes to cut costs and sharpen global competitiveness?
India’s electronics manufacturers have urged the government to overhaul customs duties in the upcoming Union Budget, arguing that tariff rationalisation is essential to sustain growth in mobile phone and electronics production.
Industry body India Cellular & Electronics Association (ICEA) has submitted a detailed proposal seeking lower duties on components and capital equipment to protect competitiveness as global firms diversify supply chains away from China.
According to a report by the Financial Express, the suggested changes could benefit companies such as Apple’s contract manufacturers, Samsung, Dixon Technologies, Tata Electronics and Reliance-backed ventures. Lower duties would reduce input costs, lift margins and support faster localisation of components that are still largely imported.
A central request is a cut in import duties on mobile phone sub-assemblies, including microphones, receivers, speakers and printed circuit board assemblies. Although these parts account for only a small share of a handset’s cost, manufacturers say higher component-level tariffs increase overall production costs.
ICEA has proposed aligning these duties at 10%, in line with other sub-assemblies. Executives believe this would help India compete with rivals such as Vietnam.
The issue is particularly important for Apple and Samsung, which operate large assembly lines in India. With smartphone exports now a key driver of electronics shipments, even small cost savings can improve export competitiveness. Apple’s suppliers, including Foxconn and Tata Electronics, are particularly sensitive to changes in input costs given the scale of iPhone exports.
The industry has also called for the elimination of inverted duty structures. In some cases, inputs attract higher duties than finished products. This discourages domestic manufacturing of items such as display assemblies and wireless charging modules.
ICEA has sought zero-duty imports for key inputs, while retaining moderate tariffs on finished goods.
Capital equipment is another concern. While finished machinery often enters duty-free, parts used to make machines locally face duties of up to 20%. Manufacturers want exemptions for these inputs to encourage domestic equipment production.
The other proposals focus on easing rules under bonded manufacturing schemes and standardising customs classifications to reduce disputes, delays and compliance costs.
Taken together, the proposals call for a more predictable and competitive duty framework. Until then, all eyes will be on February 1, when the Union Budget is unveiled.
