Smartphone Prices To Remain Unchanged Despite Import Duty Cuts On Components; OEMs Hail Union Budget 2025

In a bid to boost local manufacturing, the government on Saturday (February 1) introduced a customs duty exemption for 28 types of machinery and capital equipment used in manufacturing lithium-ion batteries for mobile phones, in the Union Budget 2025. The government has also eliminated the previous 2.5 per cent basic customs duty (BCD) on essential components, including printed circuit board assemblies (PCBA), camera modules, connectors, USB cables, and fingerprint sensors, reducing it to zero. 

No Reduction In Smartphone Prices

Industry analysts believe there will be no reduction in smartphone prices despite the cut on components in Budget 2025, in the wake of depreciating rupee that gives way to an increase in the cost of raw materials, components, and other inputs that are denominated in dollars.

"If we translate the net impact per device from all these components as a percentage of bills of material, this will translate to an impact of 3-4 per cent but not all smartphone OEMs are willing to pass on the consumers. So, the net impact will be around 1-2 per cent on end consumers but at least, this will streamline duty structure on sub-components that will take some time to localise and make their imports attractive," Tarun Pathak, Research Director at Counterpoint Research told Acko Byte.

Echoing similar sentiments, Navkendar Singh, Associate Vice President of Devices Research at IDC India, South Asia & ANZ told Acko Byte: "Yes, no reduction in prices expected. Brands will use this to offset the depreciating rupee."

"It’s good to see BCD reduction on several components / sub-components of mobiles. However, I don’t see it having an impact on retail prices. The overall contribution of these isn’t significant enough for OEMs to consider passing on the benefit to consumers. We have been witnessing weakening rupee which does pinch their imports bill. At best this reduction will help OEMs to absorb some of rupee-dollar variation," Faisal Kawoosa, Founder & Chief Analyst at Techarc, told Acko Byte.

In a major push to electric vehicle (EV) production, the Centre has removed customs duties on 35 new types of capital equipment used in lithium-ion battery manufacturing. 

It has raised import tariffs on interactive flat-panel displays (IFPDs) from 10 to 20 per cent and cut customs duty on open-cell TV panels to 5 per cent, a move that might make LED and LCD TVs more affordable for buyers.

OEMs Hail Budget 2025

“The Union Budget 2025-26 presents encouraging prospects for the technology and digital infrastructure sector. Reducing BCD to 5 per cent on open cell components and including 28 additional capital goods for mobile battery fabrication will strengthen local manufacturing and generate employment in the sector," Ravi Kunwar, VP and CEO, HMD India told Acko Byte.

“For electronics manufacturing, the relaxation in BCD for certain components is a positive step and a continuation of earlier policy initiatives and will boost indigenous manufacturing. We welcome the union budget in letter and spirit as both developments positively impact the Optiemus Group," said A. Gururaj, Managing Director, Optiemus Electronics.

CP Khandelwal, CEO, PR Innovation, Brand Custodian, Amazfit India said: “By making India a cost-competitive hub for advanced display manufacturing, we’re poised to cut reliance on imports for LCD/LED panels, which currently account for 80% of the $7 billion display market. This will catalyze local R&D in next-gen technologies like OLED and MicroLED, critical for smartphones, wearables, and smart TVs."

"The Union Budget 2025 signals a strategic move to position India as a global hub for mobile manufacturing. The proposed tariff reductions on essential assembly components—such as PCBAs, camera modules, USB cables, and display modules—are a welcome measure that will improve cost efficiencies, and accelerate localisation," said Arijeet Talapatra, CEO at Itel and Tecno.

"The announcement on BCD exemption for critical minerals like cobalt is a welcome move and will help India overcome disabilities that exist for manufacturing of lithium-ion batteries as compared to other countries," Manish Sharma, Chairman, Panasonic Life Solutions India & SA, told Acko Byte.

"The Union Budget 2025 takes a decisive step toward strengthening India’s economy with a strong focus on innovation, digital transformation, and manufacturing excellence," said Alok Dubey, Chief Finance Officer, Acer India.