According to news agency Reuters, the government is considering lowering import taxes on essential parts used in the production of high-end smartphones. This move might be especially advantageous to businesses like Apple and increase the country's exports.
The idea is being refined by the Indian ministry of electronics and information technology, with the goal of incorporating the possible duty reductions in the next Interim Budget 2024–25, which is scheduled to be unveiled on February 1.
A number of industry participants have been promoting reductions on around a dozen components in order to bring down the cost of producing smartphones in India. The goal of the action is to provide competitors in the region, such China and Vietnam, the same opportunities.
According to a news agency report, the electronics ministry is working on the idea, which is currently under wraps. No information has been released about the proposal, including the amount of duty cuts and the particular components that will be affected.
When the budget is finalized, the finance ministry will make the ultimate choice about these suggested reductions. As to the India Cellular and Electronics Association (ICEA), import levies on mobile phone components, such as chargers and camera modules, vary from 2.5 percent to 20 percent at present.
In comparison to six other manufacturing nations, namely China, Vietnam, Mexico, and Thailand, India's levies rank among the highest
Reduction in import duty can boost phone exports and will also boost mobile manufacturing in India.
Industry analysts contend that India's rise in mobile phone exports may slow down if these levies are not lowered.
In the most recent fiscal year (2022–2023), exports of mobile phones more than doubled to $11.1 billion from the previous year, helped by government incentives promoting domestic production. The sector expects exports for the fiscal year 2023–2024 to total $15 billion.
Apart from Apple, Samsung of South Korea and Xiaomi of China are major players in India's mobile phone export market. Although Apple assembles iPhones in India at the moment, it is looking for ways to diversify its manufacturing away from China by increasing production of iPads and AirPods.
Finance Minister Nirmala Sitharaman removed a 2.5 percent customs charge on some parts of mobile camera phones from the budget for the preceding fiscal year (2023–2024). The purpose of this move was to promote the manufacture of luxury cell phones in India.
The trade department is also requesting reductions in import duties on over a dozen commodities, which include engineering supplies and materials used in the manufacturing of clothing.
These initiatives are in line with larger ones aimed at increasing domestic manufacturing and making Indian products more competitive in the international market.
