Centre may revise duty on electronics

By, New Delhi
Jan 28, 2022 04:32 AM IST

The changes will be directed towards encouraging local manufacturing and increasing local sourcing of components.

The government is likely to rejig customs duties on components or sub-parts of consumer electronics and mobile phones in the upcoming Union budget, two people familiar with the development said.

Finance minister Nirmala Sitharaman will present the Budget on February 1 (Representative Image)
Finance minister Nirmala Sitharaman will present the Budget on February 1 (Representative Image)

The changes aim to encourage local manufacturing and increase local sourcing of components, one of the people cited above said, asking not to be named. Further simplification of customs procedures was also being discussed, the person said. “The steps would make local production easier and lower the compliance burden,” the person said. The government is considering reducing import duties on components of audio devices and wearables such as smartwatches and smart bands to boost local manufacturing, the second person said, also declining to be identified.

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This is likely to be one of the new sectors where the government expects exports to pick up, on the lines of the success in mobile phone manufacturing and exports. Exports in the electronics components segment are expected to rise to $8 billion in FY26 from a negligible amount in FY21, while electronics components exports are expected to nearly double to $17.3 billion from $9 billion in the same period, according to the vision document released earlier this week by communications and information technology minister Ashwini Vaishnaw. “Components such as battery packs, chargers, USB cables, connectors, inductive coils, magnetics, and flexible PCBAs (printed circuit board assembly) can be manufactured in India with the existing capabilities with modest policy support,” said the vision document on India becoming a $300 billion electronics manufacturing powerhouse by 2026, from the current $75 billion.

India has a production potential of components worth $25 billion, which is about 12% of the global spend.

The industry has backed the need for an initiative on the lines of the production-linked incentive scheme for components for electronics and other goods across industries.

The electronics industry earlier proposed a staggered approach on levying basic customs duty on components such as printed circuit boards, batteries, speakers, mechanics, and cables between FY23 and FY26, while advocating stable tariffs.

It had batted for reducing duty from the present 20% to 5% in FY24, 10% in FY25, and 15% in FY26 for printed circuit board assembly, and duties for other components to be kept at 5% for FY25 and 10% for FY26.

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