Key Points:
- Basic Customs Duty (BCD) on imported mobile phones, PCBA, and chargers reduced from 20% to 15%.
- Move aimed at benefiting consumers and boosting the domestic electronics manufacturing ecosystem.
- Industry leaders welcome the decision, expecting increased consumer spending and manufacturing expansion.
The Indian government has announced a reduction in the basic customs duty (BCD) rates on imported mobile phones, printed circuit board assembly (PCBA), and mobile chargers from 20% to 15%. Union Finance Minister Nirmala Sitharaman unveiled this change as part of the Union Budget, emphasizing its intent to benefit consumers.
“With a three-fold increase in domestic production and nearly a hundred-fold surge in mobile phone exports over the last six years, the Indian mobile phone industry has matured significantly. To benefit consumers, I propose reducing the BCD on mobile phones, mobile PCBA, and mobile chargers to 15%,” Sitharaman stated during the budget announcement.
Industry Reactions
Industry executives have largely praised this move, anticipating it will bolster the country’s electronics manufacturing sector. Muralikrishnan B, President of Xiaomi India, expressed on social media, “The #Budget2024 decision to reduce BCD on mobile phones, PCBA, and chargers while simultaneously extending exemptions on inputs/raw materials for smartphone manufacturing, capital goods, and inputs for capital goods in the electronics industry is a welcome move that will encourage the domestic electronics manufacturing ecosystem,”
Arijeet Talapatra, CEO of Transsion India, highlighted the potential benefits for consumers and manufacturers, stating, “This policy change will significantly benefit manufacturers and consumers, fostering a more competitive smartphone market…This move will undoubtedly bolster the industry’s growth, making smartphones more affordable. We remain committed to the ‘Make-in-India’ initiative to bring the best-in-class smartphones to the ever-evolving Indian market,“
Additionally, CP Khandelwal, Joint Managing Director of HTech, noted, “The government’s decision to reduce the Basic Customs Duty on mobile phones, PCBs, and chargers to 15% marks a pivotal moment for our technology sector. This strategic move recognises the significant maturation of the Indian mobile industry in recent years and is set to attract global value chains to our shores, enabling large-scale manufacturing operations,”
Impact on Prices and Market
The reduction in BCD is expected to lower the costs of imported mobile phones and components, potentially leading to reduced prices for consumers. Analysts believe this move could boost smartphone volumes in India, especially in the mass segments below ₹25,000. Navkendar Singh, an analyst with IDC, commented, “This can rationalize prices, especially in the mass segments like below ₹25,000, and stimulate growth in domestic consumption of phones. We might see price reductions in the ₹12-13k segment, boosting the uptake of 5G devices.”
Singh also noted the potential for increased device manufacturing in India for exports, as the lower cost of importing PCBAs could lead to higher production volumes within the country.
While the industry is optimistic, it remains to be seen if the cost reductions will be fully passed on to consumers. However, the overall sentiment is positive, with expectations of a stronger domestic manufacturing sector and more affordable smartphones for the Indian market.
