In a move to further enhance India’s electronics manufacturing capabilities, Finance Minister Nirmala Sitharaman announced crucial reductions in import duties on several key components in the Union Budget 2025. These changes are expected to make mobile phones, smart LED TVs, and other electronic devices more affordable, while bolstering the country’s position in global supply chains. Specifically, the BCD on mobile phones, mobile phone chargers, and mobile printed circuit board assemblies (PCBAs) has been cut from 20% to 15%.

Customs duty is the tax levied on items transported across international borders. It is applicable to both the import and the export of goods. This duty serves to raise govt revenues as well as safeguard local industry. Another purpose is to regulate cross-border goods movement.

The usual types of import duties include: a) Basic duty, b) Additional Customs duty, c) True Countervailing duty or additional duty of customs, d) Anti dumping duty/Safeguard duty. Basic customs duty is one part of the import tariffs that India levies. Apart from this, import duties also include social welfare cess, Agriculture Infrastructure Development Cess (AIDC), and IGST (Integrated Goods and Services Tax).

Budget 2025: Reduction in Duties for Mobile Phone Components

Sitharaman proposed a full exemption of customs duties on several components used in the assembly of mobile phones, including parts such as printed circuit board assemblies (PCBA), camera modules, USB cables, and fingerprint readers. These components, which were previously taxed at 2.5%, will now be duty-free. This move is expected to reduce production costs for domestic manufacturers, making smartphones more affordable for Indian consumers.

The Finance Minister also revealed that customs duties on open cells used in TV panels, such as those for LED and LCD televisions, will be fully exempted. This is expected to lower production costs for television sets, benefiting manufacturers and consumers alike.

Union Budget 2025: Support for Electric Vehicle Manufacturing

The government has also prioritised the development of India’s electric vehicle (EV) manufacturing sector. As part of the budget proposal, Sitharaman announced the exemption of duties on cobalt powder, lithium-ion battery scrap, and 12 other critical minerals. These materials are essential for the production of lithium-ion batteries used in mobile phones and EVs.

“To the list of exempted capital goods, I propose to add 35 additional capital goods for EV battery manufacturing and 28 additional capital goods for mobile phone battery manufacturing. This will boost domestic manufacture of lithium-ion batteries, both for mobile phones and for electric vehicles,” said Sitharaman in her budget speech.

This move is set to strengthen India’s domestic battery manufacturing capabilities, furthering its ambitions to become a hub for both mobile phone and EV production.

Budget 2025: Increased Duties on Interactive Flat Panel Displays

While some components saw reduced duties, the government also proposed an increase in the customs duty on interactive flat panel displays, raising it from 10% to 20%. This measure is part of a broader effort to address India's inverted tariff structure, where duties on raw materials or intermediate goods were often higher than those on finished products.

A Comprehensive Plan for Digital and Manufacturing Growth

The Union Budget 2025 also saw the announcement of a National Manufacturing Mission, aimed at supporting domestic production across several key sectors, including solar PV cells, EV batteries, wind turbines, and grid-scale batteries. This initiative will provide policy support, execution roadmaps, and monitoring frameworks for industries at all levels, in line with India’s "Make in India" vision.

“To further the Make in India policy, our government will set up a National Manufacturing Mission covering small, medium, and large industries. This mission will provide policy support, execution roadmaps, and a governance and monitoring framework for central ministries and states,” Sitharaman added.

A Focus on Semiconductors and Electronics Manufacturing

India’s semiconductor manufacturing sector also received significant attention in this year’s budget. The allocation for semiconductor and display manufacturing schemes has been increased substantially, from ₹1,500 crore in 2023-24 to ₹6,903 crore in 2024-25. This growth will help fund critical semiconductor projects, including the ongoing construction of Tata’s semiconductor plant in Dholera and Micron’s facility in Sanand.

Additionally, the government has allocated ₹6,200 crore for the production-linked incentive (PLI) schemes for electronics and IT hardware manufacturing. This is part of a broader strategy to increase India’s share in global electronics production, with Prime Minister Narendra Modi targeting $500 billion in electronics manufacturing by FY30.

India’s Electronics Industry: Growth and Prospects

India’s electronics industry has grown rapidly, with the sector expanding from ₹1.9 lakh crore in FY15 to ₹9.52 lakh crore in FY24. This growth has been driven by a surge in mobile phone manufacturing, with 99% of the smartphones used in India now produced locally. The Economic Survey revealed that 75% of the 3.3 million phones produced in FY24 were 5G-enabled, and smartphone exports reached $15.35 billion between April and December 2024—matching the total smartphone exports for FY24.

India’s rise as the world’s second-largest mobile phone manufacturer is reflected in its impressive share of the global market, with companies like Apple and Samsung leading the charge. In 2024, Apple held a 23% share of the Indian smartphone market, while Samsung accounted for 22%, according to research firm Counterpoint.

The announcements made in the Union Budget 2025 signal a pivotal moment for India’s electronics and electric vehicle sectors. The reduction in import duties on key components, alongside the establishment of new initiatives like the National Manufacturing Mission, is expected to encourage greater domestic production, attract foreign investment, and make electronic products more affordable for Indian consumers. With a focus on mobile phones, televisions, and electric vehicles, India is positioning itself as a key player in the global electronics manufacturing industry.