Your next smartphone purchase may be cheaper after government’s import duty cut

The Indian government has reportedly axed customs duty on several imported parts which are used in electronics manufacturing. The new duty rates have already come into effect and will stay in place until March 31, 2029. In addition to that, the government has also expanded duty concessions for machinery used to make lithium-ion batteries and wireless charging modules. The officials clarified that with these changes they want to encourage more companies to invest in local manufacturing, improve production, and create jobs. Furthermore, this may also strengthen India’s position as a global electronics production hub. Here’s everything which is getting cheaper and what remains the same after the latest reduction on import duty.

According to reports, the government has removed import duties of 5 per cent and 7.5 per cent on a range of key components used in electronics manufacturing as part of its revised customs duty structure. The relief applies to parts used in wireless charging modules for smartphones, lithium-ion cells, and display components used in medical devices, automobiles, and industrial electronics.

The notifications issued by the Central Board of Indirect Taxes and Customs (CBIC) confirmed that the benefits will be available under a comprehensive schedule covering 85 categories of equipment spanning the entire battery production chain, which is way bigger than the earlier list. The authorities have also clarified that these benefits will continue until March 31, 2029, and will give manufacturers more confidence to make long-term investments.

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Import duty slashed

Here are some of the categories that have received exemption from the customs duty while importing: 

• The duty relief is expected to reduce production costs for manufacturers such as Apple, Xiaomi, and other brands assembling devices in India.
• Components used in wireless charging modules, lithium-ion batteries, and specialised display assemblies will now become less expensive to import.
• Battery manufacturing equipment used for coating, mixing, testing, welding, packaging, and quality inspection will also attract lower customs duty.
• Auxiliary systems such as dust collection, solvent recovery, heat recovery, and effluent treatment equipment have also been included.

Note: The government hopes these changes will encourage more companies to manufacture advanced electronics and battery components within India.

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Import duty remains same

The customs exemption does not apply to the following items:

• Display assemblies used in mobile phones
• Smartwatches
• Televisions
• Smart meters
• Interactive flat panel displays

These products will continue to attract the existing duty structure. Furthermore, industry experts believe that consumers should not expect a sharp decline in smartphone prices immediately.

Although cheaper imports can help reduce manufacturing costs, the increasing prices of memory chips and other important parts are still making production more expensive. Rather than reducing the price of phones, the effect of this new policy is to ensure that the prices will not increase too quickly in the future.