Budget 2023: Relief in custom duty can have negligible impact on mobile phone pricing for consumers, experts say

To deepen domestic value addition in manufacturing of mobile phones, Finance Minister Nirmala Sitharaman proposed to provide a relief in customs duty on import of certain parts and inputs like camera lens and continue the concessional duty on lithium-ion cells for batteries for another year. However, this will have negligible impact on the final product price of mobile phones for end consumers.  

India Cellular & Electronics Association (ICEA) explained that the government has proposed the removal of duty of Camera lens of 2.75 and continuation of custom exemption notifications which were facing a sunset on the March 31, 2023 for another one year. While these steps are in the right direction but will have no significant impact on the final product price. The cost impact on mobile phone’s Bill of Material (BoM) will be merely 0.16 to 0.19 per cent.

Pankaj Mohindroo, Chairman, India Cellular & Electronics Association said: "A high performing sector’s genuine requests have not been addressed. These could have provided a significant impact on competitiveness leading to better exports, arresting the grey market and boosting revenue.”  

Emphasising on the gaps, he explained that capping of basic custom duty (BCD) on import of high-end mobile phones to arrest the burgeoning smuggled market which has crossed Rs 12,000 crore in 2023. This measure would have boosted government revenue, reduced smuggling, ensured fair trade and helped build legal businesses in India. Also, removal of input duties of 2.75 per cent, duty imposed in the previous budget on the many Inputs of PCBA, Inputs of Connector & Inputs of Camera module would have spurred the growth of this industry. Even though India has built a huge charger manufacturing industry, removal of duty on certain parts of the chargers would have helped India to become more competitive.  

Mohindroo added: “While the industry had met the 2021-22 manufacturing target of Rs 2,75,000 crore, we will fall short of the manufacturing target of FY 2022-23 because of domestic demand shrinking in 2022-23.” This is in spite of a glorious performance in exports which will cross Rs.70,000 crores in 2022-23 (versus Rs 45,000 crore in 2021-22 plus 50 per cent increase). The 50 per cent increase in GST from 12 per cent to 18 per cent has dealt a very cruel hand to this high performing industry which kept the nation’s economy moving during the Covid-19 pandemic.  

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