Centre cuts customs duty on key mobile phone parts to boost local manufacturing
Paying heed to the consumer electronics industry's demand, the Centre on Wednesday reduced basic custom duty (BCD) on import of certain mobile phone parts and inputs like camera lens and continued the concessional duty on lithium-ion cells for batteries for another year.
Finance Minister Nirmala Sitharaman said the move is to further deepen domestic value addition in manufacture of mobile phones.
"The mobile phone production in India had increased from 5.8 crore units valued at about Rs 18,900 crore in 2014-15 to 31 crore units valued at over Rs 2,75,000 crore in the last financial year, as a result of various initiatives of the government, including the 'Phased Manufacturing programme'," she said during her Union Budget 2023-24 speech in Parliament.
She also proposed to reduce the BCD on parts of open cells of TV panels to 2.5 per cent to promote value addition in the manufacturing of televisions.
A. Gururaj, MD, Optiemus Electronics Ltd, said that continuing the import duty cuts on camera lens and batteries for mobile manufacturing "is a welcome step and this will continue to fuel the remarkable growth India has witnessed in domestic manufacturing."
Pankaj Mohindroo, Chairman of India Cellular and Electronics Association (ICEA), had earlier said that tariffs on inputs and components were an important barrier to increasing localisation.
ICEA had recommended that the tariff of 2.75 per cent (including social welfare surcharge), among other smaller tariffs, which have no beneficial impact and only create a burden for legitimate manufacturers, should be removed. ICEA also recommended reducing the inputs of the open cell at zero duty.
"The reduction in customs duty on import of certain component parts for mobile phones is a welcome move, and will provide further impetus to deepen the domestic value addition, and in furthering the development of electronics components ecosystem in India," Prabhu Ram, Head-Industry Intelligence Group, CMR, told IANS.
Meanwhile,
Jain, Partner, Indirect Tax, KPMG In India, said this year's Budget has been largely Customs centric, and a perusal of the fine print of the Budget documents clearly exemplifies the government's intent to promote domestic manufacturing, with special focus on green mobility.
This is evident from Nil rate of Customs duty being introduced for capital goods/machinery for manufacture of lithium-ion cell for use in EV batteries, reduction in Customs duty for import of denatured ethyl alcohol to promote petroleum blending and increase in import tariff rates for petrol/diesel run vehicles along with EVs manufactured outside India.