Govt cuts import duty on mobile phones; imported handsets to become up to 6% cheaper

New Delhi: Imported mobile phones will become cheaper by up to 6 per cent as the government in the FY25 budget has reduced customs duty on such shipments to 15 per cent from 20 per cent earlier.

Finance Minister Nirmala Sitharaman, while presenting the Union Budget for fiscal year 2024-25 on Tuesday, proposed slashing import duty on mobile phones, chargers and some components that are used for manufacturing of handsets.

She said with a three-fold increase in domestic production and almost 100-fold jump in exports of mobile phones over the last six years, the Indian mobile phone industry has matured.

"In the interest of consumers, I now propose to reduce the BCD (basic customs duty) on mobile phone, mobile PCBA and mobile charger to 15 per cent," Sitharaman said.

Earlier BCD on mobile phones, chargers and motherboards was 20 per cent.

Mobile phone industry body ICEA said that the move will enhance export competitiveness of India in the segment.

"On mobile phones there could be a 5-5.5 per cent reduction on the few models which are imported. Charger duty reduction will impact 0.15 to 0.20 per cent on the final phone since domestic manufacturers will also reduce prices," ICEA chairman Pankaj Mohindroo said.

Most of mobile phones sold in India are made within the country.

The government has proposed to exempt specified goods for use in manufacturing of connectors in mobile phones and oxygen-free copper for use in manufacturing of resistors (an electronic component) from BCD levy.

The BCD on specified goods for use in manufacturing of connectors was in the range of 5 to 7.5 per cent and oxygen-free copper for use in manufacturing of resistors attracted 5 per cent BCD.

"We had recommended reducing BCD on mobile phones, its PCBA and charger/ adapter to 15 per cent, which has been accepted. The mobile and electronics industry is elated with the announcements and will go a long way to enhance manufacturing, exports and our competitiveness," Mohindroo said.

The government has included rubber, glass and aluminium in the reduced BCD rate that are used for making mechanics and die cut parts in mobile phones.

Mohindroo said that some of the duty exemptions that were due to lapse in September have now been extended till March 2026.

Xiaomi India President Muralikrishnan B said that his company manufactures nearly 100 per cent 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. The proposal for a comprehensive review of the tariff rate structure is another positive step that will further strengthen the industry," Muralikrishnan said.

He lauded the government's emphasis on increasing women's participation in the workforce and the employment-linked incentives for first-time employees.

"With these progressive steps, we anticipate a surge in consumer spending, including increased demand for smartphones," Muralikrishnan said.

Mobile manufacturing company BlackZone Mobiles Managing Director Kannav Thukral said that the reduction of BCD will lower production costs, making Indian-made mobile devices more competitive and the reduced taxes will lead to higher profits and increased production."