The Indian mobile industry is urging the government to implement significant changes in the upcoming Union Budget aimed at enhancing local manufacturing capabilities. The India Cellular and Electronics Association (ICEA) has outlined a wishlist that includes the reduction of customs duties on essential mobile components and machinery. This request is prompted by recent export restrictions imposed by China, raising concerns regarding India’s reliance on imported manufacturing equipment. Representing major players in the mobile sector, such as Apple, Xiaomi, and Vivo, the ICEA emphasizes the necessity for policy adjustments to cultivate a more self-reliant manufacturing ecosystem.
Customs Duty Reduction for Mobile Components
The ICEA advocates for a reduction in customs duties on critical mobile parts, including microphones, printed circuit boards, and wearables. These changes aim to lower production costs for mobile handsets, enhancing their competitiveness in both domestic and international markets. It has been noted that certain specialized machinery crucial for manufacturing mobile phones and lithium-ion cells is currently excluded from existing customs duty exemptions. This exclusion results in increased project costs and hinders the development of comprehensive manufacturing lines. The ICEA argues that these machines are specifically designed for mobile phone production and are essential for completing the manufacturing process.
Addressing Supply Chain Vulnerabilities
In light of China’s recent export restrictions on manufacturing machinery, the ICEA highlights that India’s dependence on imported equipment presents a strategic risk. The association recommends that the government extend the zero-duty benefit on capital equipment to encompass all components and assemblies imported for manufacturing. This extension is vital for mitigating supply chain vulnerabilities and reinforcing domestic production capabilities. The ICEA believes that reducing setup costs and expediting the commissioning of manufacturing facilities will not only enhance export competitiveness but also generate job opportunities within the energy-storage sector.
Rationalizing Tax Structures for Displays and PCBs
The ICEA has also called for a rationalization of the tax structure for displays used in various devices, such as automotive dashboards. The association proposes a 15% import duty on display assemblies, while exempting components used in their manufacturing from basic customs duties. This change aims to promote local production and decrease reliance on imports. Furthermore, the ICEA seeks a reduction in the import duty on printed circuit board assemblies (PCBA) from 15% to 10%. The organization asserts that such a reduction will not negatively impact domestic producers, as PCBA manufacturing is already well-established in India.
Impact on Hearables and Wearables Market
Additionally, the ICEA is advocating for a decrease in the basic customs duty on finished hearables and wearables from 20% to 15%. This adjustment is expected to make imported audio devices more affordable without adversely affecting local manufacturing. The association argues that a moderate reduction aligns with India’s objective of establishing a uniform and moderate peak tariff structure. This shift aims to promote market access, scalability, and affordability, bolstering India’s reputation as a progressive, market-oriented economy. The ICEA’s comprehensive recommendations indicate a concerted effort to fortify the domestic electronics manufacturing ecosystem in response to global challenges.
Digihunt is not a financial advisor and this is not investment advice.