The Union Budget 2025-26 has introduced key revisions to customs duties aimed at bolstering domestic manufacturing in the electronics sector. The Indian government has reduced the Basic Customs Duty (BCD) on several components used in mobile phones and TVs, which could potentially lead to lower prices for consumers. Additionally, the budget focuses on rectifying the inverted duty structure, supporting local production, and reducing reliance on imports.

Key Highlights of the Budget’s Impact on Electronics

Boosting Mobile Phone Component Manufacturing

To encourage domestic production, the government has reduced the BCD on key components used in mobile phones. The following inputs and parts will now have zero customs duty (down from 2.5%):

Printed Circuit Board Assemblies (PCBA)

Camera modules

Connectors

Raw materials for wired headsets, microphones, USB cables, and fingerprint sensors

By lowering these costs, the government aims to strengthen India’s position as a global hub for smartphone manufacturing and exports.

Correction of the Inverted Duty Structure

The budget addresses a long-standing issue in the electronics industry by revising duty structures for key products.

Interactive Flat Panel Displays (IFPDs): The customs duty on IFPDs has been increased to 20%, while the duty on open cells (a key component) has been reduced to 5%.

TV Panel Production: To incentivize the local manufacturing of LED/LCD TV panels, the BCD on critical inputs such as chip-on-film, PCBA, and glass board/substrate cells has been reduced from 2.5% to 0%. This move is expected to make TV manufacturing more cost-effective in India.

Encouraging EV and Mobile Battery Production

The government has also focused on boosting lithium-ion battery manufacturing.

35 additional capital goods for Electric Vehicle (EV) battery production and 28 additional capital goods for mobile phone battery manufacturing have been added to the list of exempted goods.

This move aligns with India’s broader goal of promoting clean energy and reducing dependence on battery imports.

Lower Duty on Ethernet Switches

To streamline tax structures and prevent classification disputes, the BCD on carrier-grade ethernet switches has been reduced from 20% to 10%, bringing it in line with non-carrier-grade ethernet switches.

Impact on Consumers and the Industry

The customs duty reductions are expected to provide a significant boost to domestic electronics manufacturing under the “Make in India” initiative. The key benefits include:

Potential Price Reductions: Lower input costs could translate into lower prices for mobile phones, TVs, and other electronic products. However, immediate price cuts may not happen due to market factors such as demand, supply chain costs, and manufacturer pricing strategies.

Increased Investment: The government’s push for local production may encourage further investments from global and domestic players in the electronics sector.

Reduced Import Dependence: With easier access to raw materials and lower taxes on essential components, Indian manufacturers can compete better in the global market.

Conclusion

The Union Budget 2025-26 brings a strong push for domestic electronics manufacturing by reducing key import duties and addressing structural inefficiencies. While the impact on retail prices may take time, these reforms pave the way for a more self-reliant and cost-competitive electronics industry in India.