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How reduced taxes on mobile parts could impact smartphone-making industry in India? Explained

The government's decision to cut import duties on mobile phone components is a strategic move to promote the growth of India's mobile manufacturing sector, making it more competitive on the global stage.

Vishal Upadhyay Written By: Vishal Upadhyay New Delhi Updated on: January 31, 2024 14:48 IST
import duty cut on smartphone parts, smartphone parts, mobile parts, budget 2024, central govt, tech
Image Source : FILE Representational Image

The centre has taken a big step to support mobile phone production in India. Import duties on certain components used in making phones have been lowered from 15 per cent to 10 per cent. Additionally, the import duty on crucial materials needed to manufacture these components has been completely removed.

Components Getting Cheaper

This reduction applies to various parts like battery covers, main lenses, back covers, and mechanical items such as screws and SIM sockets. Metal-made mechanical items for cellular mobile phones, such as battery covers, front covers, GSM antennas, sealing gaskets, and more, also see a reduced duty.

Expanded List of Components

The list includes conductive cloth, LCD conductive foam, BT foam, heat dissipation stickers, protective films, and various items used to make cell phones.

Impact on the Mobile Phone Sector

The goal is to boost India's mobile phone manufacturing sector and make it more competitive globally. India has been actively attracting major companies like Apple, Xiaomi, Samsung Electronics, and Vivo to expand their assembly operations in the country.

Industry Response

The India Cellular and Electronics Association (ICEA) believes this duty reduction will strengthen India's position in mobile phone manufacturing, making it more competitive in the global market.

"Electronics has improved from the 9th position a few years ago to India's 5th largest export in 2024. Mobiles constitute over 52 per cent of electronics exports thanks to the Production-Linked Incentive Scheme. This is the first industry to leapfrog from import substitution to export-led growth within the last 8 years," Pankaj Mohindroo, Chairman, the Indian Cellular and Electronics Association (ICEA) said in a statement. 

Mobile Manufacturing Growth in India

As global mobile companies set up units in India, the country has seen a significant increase in mobile phone exports. In the fiscal year ending March 2023, exports reached $11.1 billion (Approx. Rs. 92,174 crore), doubling year-on-year. Projections indicate that exports could rise to $15 billion (Rs. 1,24,560 crore) in the current fiscal year.

Addressing Concerns

Despite this growth, concerns were raised about high duties on mobile phone parts compared to other manufacturing nations like China, Vietnam, Mexico, and Thailand. 

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