Apple and Xiaomi benefit after company cuts import duty on phone parts

The Indian government has reduced the import duty on certain components used in the production of mobile phones from 15 percent to 10 percent, a move that benefits companies such as Apple and Xiaomi, which manufacture in Asia’s third-largest economy.

Import duties on parts such as battery covers, camera lenses, back covers, other mechanical parts made of plastic and metal, mobile phone antennas and other parts have been reduced to 10 percent, the Finance Ministry said in a statement on Tuesday evening.

Import duties on inputs used for the production of these components have been reduced to zero, the notification said.

Prime Minister Narendra Modi has promoted India as a smartphone manufacturing hub in recent years, prompting companies like Apple, Xiaomi, Samsung Electronics and Vivo to expand phone assembly.

However, import duties on mobile phone components were the highest among six comparable manufacturing countries, including China, Vietnam, Mexico and Thailand, prompting the industry to push for tax cuts.

“Lower import duties on mobile phone components would help large international manufacturers set up large-scale mobile assembly lines in India and significantly increase mobile phone exports,” said Rajat Mohan, director at tax consultancy MOORE Singhi.

Earlier this month, Reuters reported that India is considering cutting import duties on key components used to produce high-end mobile phones.

The move will make Indian mobile phone manufacturing more competitive, the India Cellular and Electronics Association (ICEA) said in a statement.

With global mobile companies manufacturing in India, mobile phone exports from the country doubled in the fiscal year to March 2023 from last year to $11.1 billion (around Rs 92,174 crore) and are expected to rise to $15 billion (around Rs 1,24,560 crore) in the current fiscal year, according to industry estimates.

© Thomson Reuters 2024