India has announced a reduction in import duties on parts used in the production of mobile phones in a move aimed at bolstering the mobile manufacturing sector in the country.
The import duty, previously at 15 percent, has now been scaled down to 10 percent, as confirmed by the finance ministry in a recent notification.
This reduction applies to various components crucial for mobile phone assembly, including battery covers, main lenses, back covers, and other mechanical items made of plastic and metal.
The initiative is expected to have a positive impact on major players like Apple, encouraging them to increase the local production of their high-end premium smartphones in India. Currently, India boasts the highest smartphone input tariffs among its competing manufacturing destinations.
Over the years, India has witnessed a remarkable transformation in smartphone manufacturing, cutting import dependency from 78 percent in revenue terms in 2014-15 to a mere 4 percent in 2022-23. Notably, 99.2 percent of mobile phones sold in India are now manufactured within the country. This shift has not only reduced dependency on imports but has also paved the way for exports to become the primary driver of future growth and job creation in the sector.
In the fiscal year 2022-23, India’s smartphone exports recorded an impressive 100 per cent surge, reaching $11.1 billion compared to the previous fiscal year. The industry is optimistic about achieving exports worth $15 billion in the fiscal year 2024. Exported smartphones are anticipated to constitute 30 per cent of the total production, projected to be between $49-50 billion in the current fiscal year.
The India Cellular and Electronics Association (ICEA), the nation’s leading electronics manufacturing industry body, has lauded the government’s decision to reduce import duties. In a statement, Pankaj Mohindroo, Chairman of ICEA, emphasized the importance of low input tariffs in scaling up the electronics manufacturing sector and transforming India into a global hub for electronics production and exports.
Despite these positive developments, a report by ICEA suggests that unless India aligns itself with the competitive tariff regimes of countries like China and Vietnam, along with addressing other factors impacting competitiveness, export growth may witness a slowdown beyond the current fiscal year. The report underscores the need for sustained efforts to ensure India’s continued success in the global electronics manufacturing landscape.