Finance Minister Nirmala Sitharaman's budget announcement has made high-end smartphones like Apple iPhones and Google Pixels more accessible to consumers in India. The government has cut the basic customs duty (BCD) on mobile phones and essential components from 20% to 15%. Finance Minister Nirmala Sitharaman revealed this change as part of the 2024-25 budget, aiming to benefit consumers and strengthen India's position as a key smartphone manufacturing hub.
During the budget presentation, Sitharaman highlighted that the reduction in import taxes on mobile phones, printed circuit board assemblies (PCBA), and mobile chargers is designed to serve the interests of consumers. This tax cut is expected to provide a direct advantage to companies like Apple, which still imports some of its high-end smartphones into India despite increasing local production.
Currently, about 10-12% of Apple iPhones are imported into India. The 5% reduction in import tax could offer Apple an estimated annual benefit of $35-50 million. Although Apple has ramped up its local production through partnerships with manufacturers like Foxconn and Tata Group, some high-end Pro and Pro Max models are still imported. The tax cut will particularly benefit models that rely on imported PCBAs.
The new policy is also set to benefit other smartphone manufacturers, such as Samsung, though to a lesser extent since most of their devices are produced locally. Apple and Samsung have yet to comment on the changes. According to Counterpoint, Apple currently holds a 6% share of the Indian smartphone market.
In January, India's deputy IT ministry had advocated for lower import taxes, cautioning that India might lag behind China and Vietnam in becoming a major smartphone export hub. They argued that reducing tariffs is crucial for attracting global companies quickly.
Prime Minister Narendra Modi has been actively promoting India as a major smartphone manufacturing center. The country's $24-billion local production scheme has already led to expansions by companies like Apple, Xiaomi, Samsung, and Vivo.
Additionally, Xiaomi has previously requested lower tariffs on sub-components such as batteries, USB cables, and phone covers, highlighting widespread industry support for reduced import duties.
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