India is contemplating reducing import duty on crucial components necessary for manufacturing high-end mobile phones, according to two government officials. This potential move could particularly benefit companies like Apple and enhance the country’s export potential. Several companies in the sector have been advocating for cuts on nearly twelve components to lower the production costs of smartphones in India, aiming to level the playing field with neighbouring competitors such as China and Vietnam.
All About the Indian Government Move to Reduce Import Duty
The Electronics and Information Technology Ministry in India is in the process of finalizing the proposal, including determining the extent of the duty cuts. The hope is to incorporate these measures into the federal budget scheduled for February 1, as per one official. The exact number of components included in the ministry’s proposal remains unclear. The finance ministry will decide on the cuts during the budget finalization, as indicated by the two anonymous sources familiar with the matter.
Import duty on mobile phone components, including camera modules and chargers, is currently in the range of 2.5% to 20%, and the industry, represented by the India Cellular and Electronics Association (ICEA), is seeking reductions. According to the ICEA, India’s levies are the highest among six comparable manufacturing nations, which include China, Vietnam, Mexico, and Thailand. Failure to lower these duties could potentially slow down the growth of India’s mobile phone exports.
While Apple iPhones are already assembled in India, the company is reportedly looking to expand production to include iPads and AirPods. This expansion is partly aimed at diversifying its manufacturing away from China.
In the last fiscal year (2022/23), mobile phone exports from India, excluding Apple, doubled to $11.1 billion, with expectations of reaching $15 billion in the 2023/24 fiscal year, according to industry figures. Notably, Apple has expressed its intention to increase manufacturing in India to 25% of its global total, as stated by India’s trade minister. In the annual budget for 2023–24, Finance Minister Nirmala Sitharaman eliminated a 2.5% customs duty on select parts of mobile camera phones to encourage the assembly of high-end mobile phones in India.
Additionally, India’s trade department is reportedly seeking import duty cuts on more than a dozen items, spanning from engineering goods to inputs for garment production, according to a third government official. The Department for the Promotion of Industry and Internal Trade has not responded to requests for comment on this matter.
