The Indian government has announced a major policy shift by eliminating import duties on key mobile phone components, a move aimed at strengthening local manufacturing and attracting foreign investment. Finance Minister Nirmala Sitharaman unveiled this reform in the Union Budget 2025, benefiting global giants like Apple and Xiaomi while advancing India's ambition to become a global electronics powerhouse.
With India’s electronics production surpassing $115 billion in 2024, this duty cut is expected to accelerate domestic output, simplify tariffs, and enhance the country’s competitiveness in the global supply chain.
In the past 6 years, India’s electronics production has doubled more than two times to US$115 billion (approximately Rs. 99,41,100 crore) in 2024. Earlier, the duty was 2.5% on basic components like printed circuit board assemblies (PCBA), camera module parts, USB cables and such goods. To attract more investment, the government is trying and support India’s chips to sustain in global supply chains.
According to Counterpoint Research, Samsung is following closely behind Apple in the Indian smartphone market. Apple currently holds a 23% revenue share, with Samsung following with a 22% revenue share.
This comes as the government continues to conduct its tariff cuts in a tumultuous landscape of global trade. Taking advantage of the risks caused by US President Donald Trump's ongoing tariff policies, India is chasing China, and Vietnam's place in the export of smartphones. In India’s internal warning last month, the IT ministry warned that the country was at risk of losing its edge in the global electronics market without lower tariffs.
Sitharaman’s policy follows last year’s budget that outlined simplifying India’s thorny customs duty structure. Among these it included being logical in terms of inverting duty issues, meaning that the raw materials pay higher taxes than the products it creates. These tariffs are made simple and rationalized in a way to encourage local efficient production and to reduce trade disputes.
Industry experts have welcomed the budget's provisions, highlighting their potential to accelerate domestic production. "The Union Budget 2025 brings good news for the industry, including the consumer electronics manufacturing sector," said Tarun Pathak, Research Director at Counterpoint. "New reductions on BCD for important components means that localisation of parts such as batteries and displays will rise."
Prabhu Ram, VP of the Industry Research Group (IRG) at CyberMedia Research, emphasized the broader benefits of the changes. "The government's revision of Basic Customs Duty (BCD) will bolster domestic manufacturing, bringing us closer to Prime Minister Narendra Modi's ambitious $500 billion electronics manufacturing target," Ram said.
In a bid to promote domestic manufacturing champions such as Dixon Technologies, the BCD rates have been revised with interactive flat panel displays registering an increase from 10% to 20% and open cell LCD and LED profits falling to 5 per cent.
India has previously supported domestic manufacturing in the telecom and electronics through import duty reforms, like these. During the early 2000s, key inputs for IT and electronics, telecom industries were placed under reduced customs duties from 25 – 35% to 5% and specified capital goods from 25% to 15%.
Also, in a more recent development, the Union Budget 2024-25 further reduces basic customs duty. From 20% to 15%, rates on components such as mobile phones, printed circuit board assemblies (PCBAs), and chargers were reduced.
These are essentially attempts to help keep India a recipient country in the global electronics industry. The goal is to attract additional international players with the hope of making production in the home more competitive in the run-up to Prime Minister Modi’s long-term desire for a sector of US$500 billion in electronics manufacturing. Current efforts match with these reforms which are India’s attempt to spur local production and gain a greater competitive edge as well as strengthen its presence in the global electronics manufacturing landscape.