In a significant move, the Indian government has reduced the import duty on components used in mobile phone manufacturing from 15 per cent to 10 per cent.
The list of components benefiting from this reduction includes battery covers, front covers, main lenses, back covers, antennas, sealing gaskets, and cases from PE, PP, EPS, PC and all other individual polymers or combination/combinations of polymers, SIM socket, screw, other mechanical items of plastic and other mechanical items of metal, as reported by Economic Times.
The decision aims to enhance the competitiveness of the Indian mobile phone sector, fostering growth and leveling the playing field with regional competitors like China and Vietnam.
The move is expected to have a positive impact on the mobile phone industry, potentially tripling exports to $39 billion over the next two years.
The Indian Cellular and Electronics Association (ICEA) anticipates that the reduction in import tariffs will drive mobile phone exports from $11 billion in FY23 to $27 billion in FY25.
As part of a broader strategy, the government's Production Linked Incentive (PLI) scheme has already contributed to India's smartphone industry, with exports surging from $7.2 billion in 2022 to $13.9 billion in 2023.
It's important to note that the PLI scheme provides cash incentives for annual incremental production, promoting local manufacturing.
However, the Global Trade Research Initiative (GTRI) cautioned against such cuts, emphasizing the importance of maintaining the current tariff structure for balanced industry growth and long-term development.
The GTRI report highlights that the success of the PLI scheme lies in maintaining a difference in tariffs between smartphones and their components.
It argues that reducing import duties on components could undermine the incentive for establishing robust manufacturing operations in India.
Nayan Dwivedi is Staff Writer at Swarajya.
An appeal from Swarajya
At Swarajya, we rely on our readers' support through subscriptions to sustain our media platform. Unlike larger conglomerates, we are unable to relentlessly chase advertising money — our model is largely built on your patronage.
Your support has never been more crucial. We work tirelessly to deliver 10-15 high-quality articles daily, ensuring you receive insightful content from 7 AM to 10 PM.
If you believe India's story has to be articulated in a way it has never been done before without shrugging it off, become a patron (or) subscribe now for ₹̶2̶4̶0̶0̶ ₹1999 and get 12 print issues, unlimited digital access for 1 year, a special India that is Bharat T-shirt (Offer ends soon).
We are counting on you!