Union Budget 2024: Customs Reduction on Phones, Chargers, PCBs Proposed

Union Finance Minister Nirmala Sitharaman has proposed incentives for the Indian technology manufacturing sector in her 2024 budget speech to parliament. The customs duty reductions are aimed particularly at supporting mobile phone manufacturing, which has grown significantly in recent years as part of the Make in India initiative. Now, to attract even more investment and simplify the input supply chain, a reduction on basic customs duty on mobile phones, parts such as printed circuit boards (PCBs), and chargers has been announced.

“With a three-fold increase in domestic production and almost a 100-fold jump in exports of mobile phones in the last six years, the Indian mobile industry has matured. In the interest of consumers, I now propose to reduce the basic customs duty (BCD) on mobile phone, mobile PCBA, and mobile chargers to 15%,” 

The move to cut basic customs duty from the current 20 percent to 15 percent is likely to help Indian manufacturers compete even more with China and Vietnam. It could also result in price reductions for popular smartphones in the massively competitive domestic market, where brands need to use every advantage to try to attract buyers. 

The government has offered multiple schemes and production-linked incentives to promote the manufacturing of smartphones and other technology product categories in India. Now, in addition to satisfying domestic demand, India could become a much larger global export hub.  

Moreover, the new Union budget also proposes to cut or eliminate import duty on over 25 minerals that are critical to electronics manufacturing, such as oxygen-free copper which is used to fabricate resistors. The change was said to be “subject to conditions”. Parts for manufacturing connectors will also be exempt from customs duty, as per the proposals.

In his analysis of the announcements, Prachir Singh, Senior Analyst, Counterpoint Research told Acko Drive, “The reduction of BCD (Basic Customs Duties) on smartphones, chargers, and PCBAs will not have any major impact on the prices of smartphones. We may expect a price cut of 1-2 percent on average from this move, however, this depends on OEMs, if they want to pass this to end consumers. In the lower price segments, we may not see this, as in these price segments, the margins are very low.

However, this could mean savings for OEMs who are importing CBU (Completely Built Units), especially like Apple or new entrants who don't have a manufacturing setup yet, or OEMs importing super-premium models such as foldables in small quantities.

On overall electronics manufacturing, the government has focused on a very key area, which is upskilling. Announcements regarding upskilling show the government's intent to grow a high-skilled labor force, and will help the electronics manufacturing sector secure high-skilled local talent.”