In a move aimed at fostering its position in the global mobile phone market, India is reportedly contemplating import duty cuts on critical components essential for the production of high-end smartphones. Government officials have revealed that the potential duty reductions, if implemented, could provide a significant boost to companies like Apple and contribute to the growth of India's exports in the technology sector.
Several companies in the industry have been advocating for duty cuts on nearly a dozen components, with the objective of reducing the overall production costs of smartphones in India. The move is seen as an effort to level the playing field with regional competitors, particularly China and Vietnam.
The electronics and information technology ministry in India is actively working on finalizing the proposal, including determining the extent of the duty cuts. Officials are hopeful that the proposal will find a place in the federal budget scheduled for release on February 1. The specifics of the components covered in the proposal remain undisclosed at this stage.
Importantly, the decision on implementing these cuts will rest with the finance ministry, which is expected to finalize the budget. The sources providing this information have chosen to remain anonymous due to the confidential nature of the proposal.
The industry body India Cellular and Electronics Association (ICEA) highlights that the current import duties on mobile phone components, including camera modules and chargers, range from 2.5% to 20%. According to ICEA, these levies are the highest among six comparable manufacturing nations, posing a potential hindrance to India's mobile phone exports growth when compared to its competitors.
India has witnessed a notable increase in mobile phone exports, reaching $11.1 billion in the fiscal year 2022/23, a doubling from the previous year. Government incentives supporting local manufacturing have played a role in this growth. Industry experts anticipate exports in the fiscal year 2023/24 to further rise to $15 billion.
Key players in the Indian mobile phone export market include Samsung from South Korea and Xiaomi from China, in addition to Apple. While Apple currently assembles iPhones in India, the company is reportedly exploring opportunities to expand its manufacturing footprint to include iPad and AirPods production.
In the 2023/24 annual budget, Finance Minister Nirmala Sitharaman eliminated a 2.5% customs duty on specific parts of mobile camera phones, signaling a government push to encourage the assembly of high-end mobile phones within the country.
In a related development, India's trade department is seeking import duty reductions on various items, ranging from engineering goods to inputs for garment production, further underlining the country's commitment to facilitating trade and bolstering its manufacturing capabilities. The International Trade Council will closely monitor these developments as they unfold.