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Duty rejig on consumer electronics, mobile phone components on the cards

Duty rejig on consumer electronics, mobile phone components on the cards
Photo Credit: Pixabay
27 Jan, 2022

The government is likely to undertake a rejig of customs duties levied on components or sub-parts of consumer electronics and mobile phones in the upcoming Union Budget, said people familiar with the development.  

The changes in terms of lower duties on components would further encourage local manufacturing, in line with the government’s plans to increase local dependence, one of the people said, asking not to be named, while adding that further simplification of customs procedures was also being discussed.  

“The two steps together would make local production earlier and lower the compliance burden,” the person said.  

A second source added that the government was actively considering the proposal to lower duties for components of audio devices and wearables like smartwatches and smart bands, which could again come as a boost to local manufacturers. This is likely to be one of the new sectors where government expects exports to pick up in the coming years on the lines of success in mobile phone manufacturing and exports.  

According to the vision document released by Communications and information technology minister Ashwini Vaishnaw earlier this week, the segment is expected to rise to $8 billion in exports in FY26 from virtually nil exports in FY21, while electronics components exports are expected to near double to $17.3 billion versus $9 billion in the same period.  

“Components such as battery packs, chargers, USB cables, connectors, inductive coils, magnetics, flexible PCBAs, charger enclosures active and passive components etc. can be manufactured in India within existing capabilities with modest policy support,” the government’s vision document on India becoming a US$300 billion electronics manufacturing powerhouse by 2026, from the current US$75 billion, said. It added that India has a production potential of $25 billion worth of components, which is about 12% of the global spend.  

The industry has backed the need for an incentive scheme on the lines of PLI for components for electronics and other goods across industries.   

`The electronics industry had earlier proposed a staggered approach on levying basic customs duty on components such as printed circuit boards, batteries, speakers, mechanics, and cables between FY23 and FY26, while advocating stable tariffs. It had batted for reducing duty from present 20% to 5% in FY24, 10% in FY25, and 15% in FY26 for PCBA, and other components kept at 5% for FY25 and 10% for FY26.

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