Budget 2024: A 5% Duty Cut to Make Imported Smartphones Cheaper
High-end smartphones could see a price drop of Rs 7,000 to Rs 15,000 with this reduction in basic customs duty. In the Budget for 2024, finance minister Nirmala Sitharaman announced that the basic customs duty on mobile phones had been cut to 15% from the existing 20%. It may reduce the devices' costs, like Google Pixel and high-end iPhone Pro models, by 5.0-5.5%, provided companies pass this benefit on to consumers.
High-end phones worth about $1 billion are imported annually, and 98% of these come from China. The domestically manufactured phones will continue to pay only the 18% GST and are not going to be affected by the reduction in customs duty.
The imported smartphones at present are subject to an 18% GST and total customs duty of 22%, which includes 20% as basic customs duty and a 2% surcharge. Total customs duty would drop to 16.5% from 22% with the new changes, though the surcharge itself would remain unchanged.
The revamped customs duty structure will also promote growth in the mobile component ecosystem. According to Ashwini Vaishnaw, Minister for Electronics and Information Technology, this rationalization of duties will have spillover benefits on mobile phone imports and act as a template for the server and laptop manufacturing industries.
Noticeably, Apple imports its iPhone Pro and Pro Max models, while other iPhones get manufactured domestically in India. Google imports its Pixel phones, while Samsung occasionally imports some of its high-end Galaxy devices. On the other hand, 99% of the mobile phones sold in India are manufactured locally.
A duty exemption on critical minerals required in the process of manufacturing electronic components has also been introduced by the budget. It is expected to bring down the cost of producing mobile phones and check smuggling, which has been rampant.
He said that according to Pankaj Mohindroo, Chairman of the India Cellular and Electronics Association, high customs duties had induced high rates of smuggling of about 80 per cent for high-end phones into the country. Now, with a reduction in duty, this smuggling is likely to come down and, in effect, improve revenue collection from both customs duty and GST.
