Import duty cut: Paving the way for India’s rise in global electronics exports?

In response to persistent calls from the industry to reduce import duties on components, the government has finally taken steps to address these demands. On Tuesday, the Government of India announced a reduction in import duties on mobile phone spare parts from 15% to 10%. As smartphone exports from India have been consistently increasing over the past few years, this could help India emerge into India into an electronics exports hub.

“This is a critical and welcome policy intervention by the government towards making mobile manufacturing competitive in India. Building scale, riding on low input tariffs is key to transforming India into a global hub for electronics manufacturing and exports”, says Pankaj Mohindroo, Chairman, ICEA.

Over the last few years, all leading smartphone players have commenced assembly in India, including Apple, Samsung, Xiaomi, Oppo, and OnePlus, among others.

According to ICEA, mobile phone exports from India had almost doubled to $5.5 billion by August 2023.

As India continues to strive hard to be a preferred location in the global value chain, Danish Faruqui, CEO, Fab Economics, says the reduction in import duty can boost exports of smartphones as leading players like Samsung and Apple would prefer assembling smartphone in India and selling across the globe, just like Tesla’s story in China.

“Such tailored incentives will help India compete and individually optimise for turning India into a global choice in each tech segment. Reducing import duty on smartphone components will enable leading smartphone players to expand and scale smartphone assembly in India and ride the smartphone growth wave,” says Danish Faruqui, CEO of Fab Economics.

Echoing the sentiment, Navkendra Singh, Associate Vice President with IDC Indiashares, “Lowering production costs by reducing import duties and providing export subsidies from India to the rest of the World will certainly help the exports of smartphones from India. Currently, only Apple and Samsung are big players in this. Gradually, with such initiatives, other brands also started shifting their export base to India.”

India’s import duty cut on mobile phone components is a strategic move, in further accelerating India’s domestic production and export competitiveness. “It fuels the components ecosystem, creating jobs and attracting investments, and aligns India with the vision of Make in India for the World,” says Prabhu Ram, Head- Industry Intelligence Group (IIG), CyberMedia Research (CMR).

According to data shared by ICEA, electronics has improved from the 9th position few years ago to India’s 5th largest export in 2024. Mobiles constitute over 52% of electronics exports because of the PLI Scheme. “This is the first industry to leapfrog out of import substitution to export-led growth within the last 8 years. Government has been an excellent and willing partner in this transformation,” adds Pankaj Mohindroo.