India Reduces Import Duty By Upto 15% For Some Smartphone Components

The reduction in import duties could drive more companies to look at India as their preferred manufacturing destination

India has implemented a reduction in import duties by up to 15% for certain smartphone components. These duty cuts are applicable to items such as battery covers, main camera lenses, back covers, plastic and metal mechanical parts, and GSM antennas, among others. The Ministry of Finance issued a notification regarding this development late on Tuesday night, possibly in preparation for the upcoming 2024 national budget announcement on February 1.

Furthermore, the import duty on inputs used in the manufacturing of these components has been reduced to zero, as stated in the notification. Over the past decade, the Modi government has actively promoted India as a hub for local electronics manufacturing through its "Make in India" initiative. This effort has yielded positive results in recent years, with companies like Apple, Xiaomi, Oppo, Vivo, and OnePlus manufacturing their devices in India through contract manufacturers like Foxconn.

Samsung, which has had a significant presence in India since the mid-90s, has established the world's largest mobile phone manufacturing factory in the country. TM Roh, Samsung's Global Head of Mobile Business, recently visited India and announced plans to commence local manufacturing of laptops at their facilities.

The high taxes on mobile phone parts in India have hindered its ambition to become a prominent destination for local smartphone manufacturing, competing with countries like China, Vietnam, Thailand, and Mexico. The reduction in import duties has been well-received as it is expected to attract major global manufacturers to establish large-scale mobile assembly lines in India and boost mobile phone exports.

Rajat Mohan, a director at tax consultancy firm MOORE Singhi, commented, "Duty cuts on import of mobile phone parts would help big global manufacturers to set up large scale mobile assembly lines in India, and substantially increase exports of mobile phones."

Muralikrishna B, the president of Xiaomi in India, expressed his support on X, stating that the reduction in import duties for mechanics and other small parts is a positive step towards promoting local manufacturing and facilitating India's growth as an electronic manufacturing destination.

"The import duty reduction in mechanics and other small parts is a welcome move and will help bridge the duty gap, which can provide a further fillip for local manufacturing of such components. Over time, such moves will help accelerate domestic value addition and facilitate India's growth as an electronic manufacturing destination," he posted on X.

The Indian Cellular and Electronics Association (ICEA) has also welcomed this change, emphasising that it will enhance the competitiveness of mobile phone manufacturing in the country. The export of mobile phones from India has doubled year on year, reaching $11.1 billion last year, and it is projected to further increase to $15 billion.