In the latest budget, India reduced import taxes for smartphones and components, as well as 25 critical metals to develop local manufacturing ecosystems. India also increased import tariffs on PCBAs for telecom equipment to discourage imports.
According to reports from Bloomberg, Reuters, and PTI, in the union budget for fiscal 2025 (April 2024 to March 2025) announced on July 23, the Indian government reduced import taxes on mobile phones and certain components. The basic customs duty on imported mobiles, chargers, and assembled printed circuit boards has been lowered from 20% to 15%. The new customs duties will take effect on July 24.
Nirmala Sitharaman, the Finance Minister of India, indicated that a comprehensive review of the rate structure will be undertaken over the next six months to simplify and rationalize it. The aim is to ease trade, eliminate duty inversion, and reduce disputes.
Meanwhile, India proposed to increase the import taxes for PCB assembly of telecom equipment from 10% to 15% to encourage domestic manufacturing. In addition, India will eliminate import duties on 25 essential minerals, including lithium and copper, to support renewable energy initiatives and secure supplies for the defense and telecommunications sectors.
"Minerals such as lithium, copper, cobalt, and rare earth elements are critical for sectors like nuclear energy, renewable energy, space, defense, telecommunications, and high-tech electronics," said the minister.
Boosting smartphone production and consumption
Smartphone manufacturers have welcomed the move, as it is expected to boost local manufacturing by lowering input costs for importers.
Neil Shah, co-founder of Counterpoint Research, told Reuters and PTI that a 5% reduction in import taxes on iPhones could provide Apple with an annual benefit of US$35-50 million, given that 10-12% of iPhones sold in India are imported.
Despite increasing local production through partners like Foxconn and Tata Group, Apple still imports high-end Pro and Pro Max models. The tax reduction will benefit Apple directly, particularly for models with imported PCBs, and will significantly help new market entrants by easing import duties.
While Samsung will also benefit, the impact will be less significant since most of its smartphones are produced locally.
According to Hindu Business Line and Financial Express, Muralikrishnan B, president of Xiaomi India, praised these changes as bolstering domestic electronics manufacturing and supporting local production by extending exemptions on inputs and raw materials.
Muralikrishnan highlighted that the proposed review of the tariff rate structure is also a positive step for the industry, reinforcing Xiaomi India's commitment to enhancing local manufacturing and sourcing components.
On the demand side, Shah noted that the 5% reduction in import duties will benefit vendors importing high-end models like Apple's Pro series, as well as new entrants like Honor and established brands such as Google and OnePlus. This tax cut could reduce iPhone Pro prices by INR3,000-4,000 and Google Pixel prices by INR2,000-3,000 if the savings are passed on to consumers.
Additionally, Prabhu Ram of CMR told PTI that lower duties on PCBA and other components may help rationalize prices for 5G phones priced between INR7,000-24,000.
