Electronics manufacturers, particularly mobile phone makers, on Monday called for the rationalisation of basic customs duty on a wide range of items, including printed circuit board (PCB), microphones, hearables and wearables in the Budget, to help reduce handset manufacturing costs.
The microphone and receiver together account for around one per cent of the Bill of Materials (BoM) of a mobile phone. Although their cost share is modest, the current 15 per cent duty adds to the overall price of the finished product. Therefore, the sector has recommended rationalising the rate to 10 per cent, in line with other sub-assemblies, to enhance cost competitiveness and strengthen the domestic electronics manufacturing ecosystem.
“As mobile phone production continues to expand and scale, this duty rationalisation will generate significant cumulative cost advantages, improve competitiveness, and encourage further investment in local component manufacturing. A reduced duty will support scale, sufficient duty differential, stabilise supply chains, discourage arbitrage, and further consolidate India’s position as a trusted global manufacturing base,” India Cellular and Electronics Association (ICEA), which represents the sector, said in its proposal to the Finance Ministry.
It added that lowering the basic Customs Duty (BCD) on hearables and wearables from 20 per cent to 15 per cent would better align this high-growth segment with India’s broader tariff rationalisation and competitiveness roadmap. A moderate reduction will not adversely affect domestic manufacturing but will enhance India’s image as a progressive, market-oriented economy.
ICEA has also suggested that the government rationalise duties on capital goods, citing recent restrictions imposed by China that posed a threat to local production of mobile phones.
“With China’s recent export restrictions on manufacturing machinery increasing supply-chain risks, India’s dependence on imported equipment has become a strategic vulnerability. It is, therefore, recommended that the government extend the existing zero-duty benefit on capital equipment to all constituent components, sub-assemblies, and assemblies imported specifically for their manufacture,” it noted.
It also said that there is no formally recognised wastage norm for mobile phone and its parts’ manufacturing, leading to procedural inefficiencies in assessing routine production losses, and therefore, it has urged for a uniform wastage norm of up to 2 per cent of input quantity for finished mobile phones and its parts, to be treated as normal manufacturing loss not attracting duties.
The mobile phone industry dominates the country’s electronics manufacturing sector at present, and according to industry estimates, more than 25-lakh people are employed in the electronics sector.
ICEA estimates that mobile phone production in the country is expected to reach $75 billion (around ₹6.76 lakh crore), comprising exports of over $30 billion (around ₹2.7 lakh crore), by the end of the current fiscal year.
Mobile phones worth ₹5.5 lakh crore were produced in the country, and exports from the segment were around ₹2 lakh crore in 2024-25.
