Will there be a reduction in customs duties on smartphone parts in Budget 2025? Well, GTRI warns that it can affect India’s local manufacturing and lead to job losses, increasing import dependence.
The Global Trade Research Initiative (GTRI) has recently warned that a proposed reduction in customs duty on smartphone parts in India’s upcoming budget could harm the country’s burgeoning local manufacturing sector.
In a statement on Tuesday, the think tank highlighted that such a move would discourage investment, increase imports, and make local companies uncompetitive, potentially leading to job losses.
India’s smartphone industry, a key success of the ‘Make-in-India’ initiative, reached US$49.2 billion in production in 2023-24, with exports standing at US$15.6 billion. However, several industry groups are pushing for further cuts to import tariffs on smartphone components for FY26.
In a report by the Economic Times, GTRI’s founder, Ajay Srivastava, cautioned that slashing tariffs could undermine India’s growing component ecosystem and long-term electronics ambitions.
He suggested that rather than reducing tariffs, the government should focus on establishing component hubs near ports to cut down on delays and warehousing costs, a strategy adopted by countries like Vietnam and China. This approach, according to Srivastava, would support local manufacturing and reduce dependence on imports.
GTRI also outlined six significant risks of tariff cuts, including discouraging investment and undermining India’s goal of self-reliance. Furthermore, Srivastava argued that lowering tariffs could lead to an over-reliance on assembly-based operations, as seen in previous policy failures.
He emphasised that tariff reductions would negatively affect the local production of mid- and low-end phones, which depend heavily on domestic components and provide substantial employment opportunities.
India’s electronics imports have surged, rising from US$15.8 billion in FY19 to US$34.4 billion in FY24. GTRI warned that further cuts would exacerbate this dependency, leaving India vulnerable to global supply chain disruptions.
