NEW DELHI: The finance ministry’s decision to reduce basic customs duty on smartphone parts will not immediately lower smartphone prices, but it is expected to boost domestic manufacturing in the country. Industry experts believe the announcement will strengthen India’s domestic electronics manufacturing ecosystem. On Tuesday, Finance Minister Nirmala Sitharaman announced a 15% reduction in basic customs duty (BCD) for mobile phones, Mobile Printed Circuit Board Assembly (PCBA), and mobile chargers.Faisal Kawoosa, founder of TechArc, believes the decision will benefit Original Equipment Manufacturers (OEMs) more than consumers. “I doubt that the savings will be passed on to consumers, as it will likely result in a benefit of less than 1.5% on the retail price. Therefore, it won’t have a significant impact on the retail price for consumers. For instance, on a phone worth Rs. 20,000, the rebate would be around Rs. 300, which is not substantial,” said Kawoosa.However, he noted that if OEMs retain the savings, which is likely given their large volumes, they will still benefit. For example, if an OEM’s annual revenue is Rs. 40,000 Crore, a 1.5% saving would be a significant amount for them.”At Xiaomi India, we have been manufacturing nearly 100% of our smartphones locally with a strong emphasis on sourcing components like PCBA, charging cables, camera modules, and mechanics, among others. Today’s announcement will help further strengthen the domestic electronics manufacturing ecosystem,” said Muralikrishnan B, President at Xiaomi India.Transsion India, which operates mobile phone brands Tecno, Itel, and Infinix, views the move as crucial for industry growth and affordability. The company said it welcomes the Ministry of Finance’s decision to reduce the basic customs duty from 20% to 15% on mobile phones, mobile PCBA, and chargers.”This policy change will significantly benefit both manufacturers and consumers, fostering a more competitive smartphone market and strengthen our position in the global market. This move will undoubtedly bolster the industry’s growth making smartphones more affordable and we remain committed to the ‘Make-in-India’ initiative to bring the best-in-class smartphones to the ever-evolving Indian market,” said Arijeet Talapatra, CEO, Transsion India.During her presentation of the 2024 budget, Finance Minister Nirmala Sitharaman highlighted the maturity of India’s mobile industry, noting a threefold increase in domestic production and nearly doubling of exports over the past six years. She proposed a 15% reduction in BCD on mobile phones, Mobile PCBA, and mobile chargers to benefit consumers.The Economic Survey reported that India exported 31% of its smartphones in FY24, elevating it to the world’s sixth-largest smartphone exporter from 23rd in 2014. Smartphone exports saw a robust 42.2% growth in FY24, making them one of India’s top five export items, valued at $15.6 billion. Leading the exports were Apple, assembling iPhones worth over Rs. 1 lakh crore in India, and Samsung, significantly contributing to India’s smartphone export sector with devices worth Rs. 65,000 crore.
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