India is reportedly considering reducing the import duty on key components required for the production of high-end mobile phones. This move can help smartphone making companies like
Apple
and even boost the country's phone exports. Major industry players have been pushing for cuts on nearly a dozen components. The reduced import duty will help smartphone brands to reduce production costs and compete with regional rivals like China and Vietnam.
According to a report by the news agency Reuters, the electronics & IT ministry is finalising the proposal which is expected to include the duty cut sizes.
These new proposals are likely to be included in the February 1 Union Budget. However, the final decision will rest with the finance ministry during
budget
finalisation.
How this can be good news for smartphone makers
Along with Apple, other major exporters including
Samsung
and
Xiaomi
will also be able to benefit from reduced import duty. The Cupertino-based tech giant is already assembling
iPhones
in India and is planning to increase its production to 25% of its global total in the country. The company is also planning to double or triple its investments and exports in the coming years.
In 2023, Apple overtook Samsung to become the largest smartphone exporter from India. In June quarter, Apple shipped 49% of the country’s total 12 million smartphones while its South Korean rival was responsible for 45% of the share. The
iPhone
exports rose from 9% in Q2 2022 to almost half in Q3 2023.
These components may get an import duty cut
Current import duties on phone components range from 2.5% to 20%. The report claims that India has the highest import duty among six comparable manufacturing nations including China, Vietnam, Mexico and Thailand.
Indian Cellular and Electronics Association
(
ICEA
) has warned that if duties remain high smartphone export growth will remain slow. In the 2023/24 budget, Finance Minister
Nirmala Sitharaman
cut 2.5% duty on select mobile camera parts to incentivise high-end phone assembly.
The report claims that camera parts for premium phones are among the components targeted for duty reductions. Government incentives have helped mobile phone exports to double to $11.1 billion in FY2022/23 and are expected to reach $15 billion in FY2023/24.
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