India Could See Increase in Manufacturing of iPhones, Other Premium Phones After Tax Cuts on Imported Parts

India expects to manufacture more mobile phones this year after the government eliminated import tariffs on some components used to assemble high-end phones from global companies such as Apple, a tax official told Reuters on Friday.

Indian mobile phone exports nearly doubled year-on-year to $5 billion (roughly Rs. 40,960 crore) between April-October in 2022, primarily supported by the government's key scheme to offer incentives to local manufacturers.

At the annual budget for 2023/24 on Wednesday, Finance Minister Nirmala Sitharaman eliminated the 2.5 percent customs duty on select parts of mobile camera phones.

"The duty structure now encourages them (phone manufacturers) to import parts and assemble here," V. Rama Mathew, member of India's Central Board of Indirect Taxes and Customs, said in an interview.

"The duty changes will benefit all phone sectors. But it will also benefit the premium phone sector because if you see the cost of components, camera assembly contributes substantially," Mathew said.

The move comes as Apple aims to boost its share of India-produced phones to 25 percent. Apple exports from India hit $1 billion (roughly Rs. 8,190 crore) in December.

The Cupertino, California-based company has bet big on India since it began assembling iPhones in the country in 2017 via Wistron, and later with Foxconn, in line with the Indian government's push for local manufacturing.

Foxconn plans to quadruple the workforce at its iPhone factory in India over two years, sources told Reuters late last year.

J.P. Morgan analysts have estimated that a quarter of all Apple products would be made outside China by 2025, up from 5 percent currently.

© Thomson Reuters 2023