On January 30, 2024, the Indian government took a significant step in the mobile phone industry by reducing import duties on mobile phone components. This decision is expected to boost the mobile phone industry as companies will now have to pay lower import duties for importing components.
Let’s understand the current status of the mobile phone segment in India and how this step can impact various aspects of India’s economic landscape.
What’s Happening?
The Indian government has announced a reduction in import duties from 15% to 10% on components used in manufacturing mobile phones. This decision is anticipated to benefit companies like Apple and Xiaomi, as it will encourage the expansion of their manufacturing activities in India.
This move is aimed at promoting domestic production and reducing dependency on imports.
Mobile Phone Industry in India
A few years ago, the electronics sector was ninth in India’s export ranking, but by 2024, it has climbed to the fifth position. Mobile phones played a crucial role in this, contributing to over 52% of the electronics export, thanks to the Production-Linked Incentive (PLI) scheme.
According to Pankaj Mohindroo, Chairman of the Indian Cellular and Electronics Association, over the past eight years, this industry has shifted from import-substitution to export-oriented development at a rapid pace. Surprisingly, approximately 99.2% of phones sold in India are now manufactured domestically, a significant shift from the 78% dependence on imports in 2014-15.
Components with Reduced Import Duty
The Indian government has recently reduced import duties on various components of mobile phones. These components include battery covers, front covers, camera lenses, middle covers, rear covers, back covers, SIM sockets, screws, and various mechanical components made from a combination of plastic and metal.
According to Reuters, it’s interesting to note that Apple already assembles its iPhones in India, and there are considerations to start production of iPads and AirPods as well. This move could create new employment opportunities in India.
Implications for Investors
The reduction in import duties on components is expected to bring relief to mobile manufacturing companies, further boosting the Indian mobile phone segment. Investors can monitor related sectors such as telecommunications and telecommunication equipment for potential opportunities. Overall, this decision could prove beneficial for both Indian consumers and the country’s economy. Hopefully, we can expect to see more affordable and better smartphones in the market soon!
What’s Next?
As per Mint, the Indian mobile industry is projected to manufacture mobile phones worth nearly $50 billion in FY24, with the value potentially reaching $55-60 billion in the next fiscal year. Export figures are also promising, with an expected export value of $15 billion in FY24 and a hopeful projection of $27 billion in FY25.
Business Today reports that the Indian Cellular and Electronics Association (ICEA) had already stated that if the government continues to reduce import duties on mobile phone components and removes duties in some other categories, India’s mobile phone exports could surpass $39 billion in the next two years, a significant increase from $11 billion in FY23. In simple terms, India’s mobile phone industry is rapidly advancing.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The article is for information purposes only. This is not an investment advice.
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