Government Axes Import Tax on Some Smartphone Parts in Boost to Apple, Xiaomi

The government has removed import duties on some components key to producing mobile phones, Finance Minister Nirmala Sitharaman announced in the annual budget on Saturday, in a boost for local production efforts and benefiting firms such as Apple and Xiaomi.

India's electronics production has more than doubled in the last six years to $115 billion (roughly Rs. 99,41,100 crore) in 2024, with the country now becoming the world's second-largest mobile phone manufacturer.

Apple led the India smartphone market with a 23% share in total revenue during 2024, followed by Samsung at 22%, according to research firm Counterpoint.

The list included components for mobile phone assembly such as printed circuit board assembly, parts of camera modules, and USB cables, which were taxed at 2.5% earlier.

The cuts will help India better cope with a potentially disruptive year of global trade due to U.S. President Donald Trump's tariff threats.

As Trump hopes for his "America First" policies to lure more manufacturing units back into the U.S., India is seeking to take advantage of U.S.-China trade tensions to increase its own share of global supply chains.

Internally, India's IT ministry had warned it risks losing out to China and Vietnam in the smartphone exports race if it were to not lower tariffs to lure global companies, Reuters reported last year.

Sitharaman, in her budget last year, had announced a review of the nation's customs duty rate structure to rationalise and simplify tariffs for ease of trade.

The duty review also aimed at removing the so-called inverted duty structures or instances where tariffs on raw materials or intermediate goods are higher than the final products they are used to produce.

India's complicated tariff structure is often cited as a deterrent for efficient local production and a cause of disputes.

"The Union Budget 2025 brings good news for the industry, including the consumer electronics manufacturing sector. New reductions on BCD for important components means that localisation of parts such as batteries and displays will rise," Counterpoint Research Director Tarun Pathak told Gadgets 360.

"The government's revision of Basic Customs Duty (BCD) will bolster domestic manufacturing, bringing us closer to Prime Minister Narendra Modi's ambitious $500 billion (roughly Rs.43,32,500 crore) electronics manufacturing target. The increase in BCD on interactive flat panel displays from 10 percent to 20 percent, combined with the reduction on open cell and other LCD/LED components to 5 percent, is a forward-thinking policy move that will provide a significant boost to domestic manufacturing champions like Dixon," said Prabhu Ram, VP - Industry Research Group (IRG), CyberMedia Research.

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