Budget 2023: Enhance electronics manufacturing as customs duty reduced on major points

Budget 2023: Enhance electronics manufacturing as customs duty reduced on major points

The government has reduced basic customs duty (BCD) on some components, such as camera lenses, in an effort to strengthen the manufacturing of electronics, including that mobile phones. However, concessional duty will continue on lithium-ion cells, a vital component of battery packs, for another year. Additionally, the government has decreased BCD on some TV unit components such as open cells.

Finance Minister Nirmala Sitharaman said that mobile phone manufacturing in the country has increased to 31 crore units worth Rs 2.7 lakh crore last financial year as compared to 5.8 crore units worth Rs 18900 crore in 2014.

The move to reduce customs duty will further provide an impetus to companies to make in India as getting the raw material is made easy. Industry body India Cellular and Electronics Association (ICEA) has been demanding a reduction in customs duty on parts and components so as to make India a competitive manufacturing destination.

“At this moment I see it a chance to contain the costs if not reduce them for consumers. Should give some cushion to OEMs to look for bringing more 5G smartphones into the affordability segment. The impact can be only estimated after knowing the fine print in terms of components included and the rates,” Faisal Kawoosa, Chief Analyst, TechArc

"The stability of tariffs for inputs is paramount for the industry; however, the constant tinkering in tariffs for inputs has made it very difficult for manufacturers in India to operate in a viable manner. The exemption notification itself should have a sunset of at least five years," ICEA had written to the government.

The electronics industry further demanded that products that are not made in India should be exempted from all duties. In addition, it asked for zero duty on open cell assemblies for manufacturing color TVs from a 5% duty imposed in 2020.

Vikas Jain, Co-Founder, PLAY Design Labs said, "A very sensible budget presentation and the FM has been considerate to the common man and industry alike. There is massive commitment of job creation and infrastructure spending which is very well received for India. Modification to the income tax slabs is a delight for the citizens and should encourage more citizens to declare their income statement. Most the industry is well taken care of and focus on strengthening manufacturing is evident. We hope to see some focus and action on the “cost of capital” in future budgets and themes. Backing manufacturing by incentivizing R&D/Design could have been a great addition and we remain hopeful for outlay for design in the forthcoming edition".