Mobile Industry Presents Budget Wishlist to Counter China Risks
The mobile phone industry in India has submitted its recommendations for the upcoming Union Budget. Major players are pushing for significant customs duty reductions on various components and machinery. They cite recent export restrictions imposed by China as a key reason for their demands.
Seeking Relief on Critical Components
The India Cellular and Electronics Association represents leading companies like Apple, Foxconn, Dixon, Xiaomi, Vivo, and Oppo. In its budget recommendations, ICEA requests a customs duty reduction on mobile parts including microphones, printed circuit boards, and wearables. The association also seeks tariff corrections on capital goods and other components. These measures aim to lower overall handset production costs.
China's export restrictions on manufacturing machinery have increased supply-chain risks for India. The industry body highlights that India's dependence on imported equipment now represents a strategic vulnerability. ICEA recommends extending existing zero-duty benefits on capital equipment to all constituent components, sub-assemblies, and assemblies imported specifically for their manufacture.
Machinery Exemptions Remain Incomplete
According to ICEA, certain critical machinery required for mobile phone and lithium-ion cell manufacturing falls outside current customs duty exemption notifications. This situation persists even though the Union Budget 2025-26 extended exemptions to various capital goods. The omission of these specialized machines leads to higher project costs and incomplete coverage of end-to-end manufacturing lines.
These excluded machines are custom-built for specific manufacturing processes rather than generic equipment. They prove indispensable for completing full production sequences. Since these machines are not manufactured domestically, their import attracts significant duties. This raises capital expenditure by 7.5 to 20 percent according to industry estimates.
Building Domestic Capacity
Global supply constraints and China's export restrictions on key battery materials have heightened urgency for building self-reliant domestic capacity. Extending exemptions will lower setup costs and accelerate commissioning of new facilities. It will also enhance export competitiveness and create employment across the energy-storage ecosystem.
The industry body specifically demands extending import duty exemptions to lithium-ion cell manufacturing machinery. This move would support India's growing electric vehicle and energy storage sectors.
Rationalizing Tax Structures
ICEA has requested the government to rationalize the tax structure for displays or screens used by various devices. This includes those used on automobile dashboards. Other recommendations include imposing a 15 percent import duty on all sorts of display assemblies used in electronic goods manufacturing.
Simultaneously, the association suggests exempting all components used for manufacturing these displays from basic customs duty. This dual approach aims to boost local production while maintaining reasonable import barriers on finished assemblies.
Enhancing Competitiveness
The industry body demands a reduction of import duty on printed circuit board assembly from 15 percent to 10 percent. PCBA forms the base of electronic circuits. This reduction would make the local market more competitive according to industry representatives.
Since PCBA manufacturing is already well localized in India, a duty reduction will not adversely impact domestic producers. Instead, it will enhance India's cost competitiveness and promote fair market practices. The move would further strengthen the domestic electronics manufacturing ecosystem.
Audio Devices and Wearables
Mobile phone makers have also asked for a reduction of basic customs duty on finished hearables and wearables. They propose lowering the rate from 20 percent to 15 percent. This change would make imported audio devices cheaper for Indian consumers.
A moderate reduction will not adversely affect domestic manufacturing according to industry representatives. Instead, it will enhance India's image as a progressive, market-oriented economy. The 15 percent rate reflects India's shift toward a uniform and moderate peak tariff structure. This approach promotes market access, scale, and affordability for consumers.
The mobile industry's budget recommendations come at a critical time for India's electronics manufacturing sector. Companies seek to reduce production costs while building resilience against global supply chain disruptions. Their proposals aim to strengthen domestic manufacturing capabilities across multiple product categories.
