The Indian government has proposed reducing the basic customs duty (BCD) on imported mobile phones, printed circuit board assembly (PCBA), and mobile chargers from 20% to 15%. This announcement came from Union Finance Minister Nirmala Sitharaman as part of the Union Budget 2024, highlighting the measure’s consumer benefits and potential to spur the domestic electronics sector.

Key Highlights from the Budget Announcement

In her budget speech, Finance Minister Sitharaman stated, “With a three-fold increase in domestic production and an 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 propose reducing the BCD on mobile phones, mobile PCBA, and mobile chargers to 15%.”

Industry Reactions

The announcement has been met with widespread approval from industry leaders, who see this as a boost for the electronics manufacturing ecosystem in India.

Muralikrishnan B, President of Xiaomi India, expressed his enthusiasm on social media: “The #Budget2024 decision to reduce BCD on mobile phones, PCBA, and chargers, while extending exemptions on inputs/raw materials for smartphone manufacturing, capital goods, and inputs for capital goods in the electronics industry, is a welcome move that will encourage the domestic electronics manufacturing ecosystem.”

CP Khandelwal, Joint Managing Director of HTech, remarked: “The reduction of Basic Customs Duty on mobile phones, PCBs, and chargers to 15% marks a significant milestone for our technology sector. This strategic decision acknowledges the Indian mobile industry’s maturity and is set to attract global value chains to our shores, facilitating large-scale manufacturing operations.”

Arijeet Talapatra, CEO of Transsion India, added: “This policy change will significantly benefit manufacturers and consumers, fostering a more competitive smartphone market. The move will undoubtedly bolster industry growth, making smartphones more affordable. We remain committed to the ‘Make-in-India’ initiative to bring the best-in-class smartphones to the ever-evolving Indian market.”

Impact on Mobile Phone Prices

The reduction in BCD on imported mobile phones, PCBA, and mobile chargers is expected to lead to lower prices for these devices. This change primarily affects devices manufactured outside India, such as certain Apple iPhone models, though many companies already produce most smartphone models domestically. The duty reduction on PCBA, in particular, is likely to have a substantial impact.

Navkendar Singh, Analyst with IDC, noted: “This can potentially rationalize prices, especially in the mass segments below Rs 25,000, and drive growth in domestic phone consumption. A price reduction in the below Rs 12-13k segment could boost 5G device uptake, and we might even see a 5G device priced below Rs 8k, which would encourage feature phone to smartphone migration at the entry-level.”

Encouraging Domestic Manufacturing

Singh further suggested that the duty reduction could stimulate device manufacturing for exports in India. “Since it will be cheaper to import PCBA, this could lead to increased production volumes in India.”

Conclusion

The government’s decision to reduce the BCD on mobile phones, PCBA, and chargers has been met with optimism from the industry, signaling a positive outlook for the domestic electronics manufacturing sector. While it remains to be seen if these cost savings will translate to lower consumer prices, the move positions India to strengthen its role in the global electronics manufacturing landscape and potentially offer more affordable smartphones to consumers.