BCD revision on key electronics components to boost local manufacturing

The revision of Basic Customs Duty (BCD) on key electronics items will strengthen the 'Make in India' initiative and help meet Prime Minister Narendra Modi's ambitious $500 billion electronics manufacturing target, the industry said on Saturday.

While announcing reductions in import duties on key electronics components in the Union Budget, Finance Minister Nirmala Sitharaman said the exemption is part of a broader initiative to support the industry by reducing costs and encouraging domestic production.

The announcement aims to strengthen India’s electronics manufacturing sector with mobile phones, smart LED TVs, and other devices more affordable while enhancing the country’s role in global supply chains.

One of the major changes includes a reduction in the basic customs duty (BCD) on mobile phones, mobile phone chargers, and printed circuit board assemblies (PCBAs).

The duty has been lowered from 20 per cent to 15 per cent, which is expected to benefit domestic manufacturers and reduce the cost of mobile phones for consumers.

To further support local production, the government has also removed customs duties on several essential components used in mobile phone assembly.

Parts such as PCBAs, camera modules, USB cables, and fingerprint readers, which were previously taxed at 2.5 per cent, will now be duty-free. This decision is expected to lower production costs and make smartphones more affordable for Indian consumers.

Television manufacturers will also see relief, as the customs duty on open cells used in LED and LCD TV panels has been fully exempted.

This change is expected to reduce production costs and make smart TVs more budget-friendly.

According to Pankaj Mohindroo, Chairman, ICEA, "The rationalisation of tariffs on key inputs and components creates a more competitive cost structure and encourages deeper integration with global value chains. Also, it will boost India’s global competitiveness."

However, while some duties have been reduced, others have been increased. Customs duty on interactive flat panel displays has been raised from 10 per cent to 20 per cent.

This decision is part of the government's effort to correct the inverted tariff structure, where duties on raw materials or intermediate goods were sometimes higher than those on finished products.

FM Sitharaman also announced that customs duties on cobalt powder, lithium-ion battery scrap, and 12 other critical minerals will be removed. These materials are essential for producing lithium-ion batteries, which are used in both mobile phones and EVs.

According to Prabhu Ram, VP-Industry Research Group, CyberMedia Research (CMR), the revision of BCD will strengthen ‘Make in India’, providing a significant boost such as domestic champions like Dixon.