The government has broadened customs duty relief across the electronics manufacturing ecosystem, removing long-standing duty distortions and extending support beyond smartphones to sectors such as electric vehicles (EV), battery storage, automotive displays and industrial electronics.
The finance ministry on Thursday issued three notifications waiving basic customs duty (BCD) on specified goods used in the manufacturing of display assemblies, lithium-ion cells and inductor coil modules, a move industry said would encourage fresh investments and deepen domestic component manufacturing.
The measures mark a shift in policy focus from finished products to components, sub-assemblies and manufacturing equipment as the government looks to increase domestic value addition in electronics. One notification extends customs relief to inputs used in display assemblies for automotive, medical and industrial applications, widening a benefit that was largely available for consumer electronics. Existing exemptions for display assemblies used in mobile phones, smartwatches, televisions and certain other products continue under separate provisions, while the new exemption for automotive, medical and industrial applications will remain in force till March 31, 2029.
Another notification removes duty on key inputs used to manufacture inductor coil modules used in wireless charging, including nano-crystalline assemblies, NFC coils, magnets and shielding material. Industry said the move corrects the inverted duty structure for the component and promotes domestic manufacturing instead of imports of finished modules. The exemption will also remain valid till March 31, 2029.
The most significant change relates to lithium-ion cells. The government has replaced separate customs exemptions for machinery used in manufacturing lithium-ion cells for mobile handsets and electric vehicles with a single technology-neutral exemption applicable to machinery used for manufacturing lithium-ion cells. Industry executives said the change removes end-use based distinctions that had created compliance and interpretational challenges, giving manufacturers greater flexibility to establish integrated facilities supplying multiple sectors, including EVs, consumer electronics and battery energy storage systems (BESS).
Pankaj Mohindroo, chairman of the India Cellular and Electronics Association (ICEA), said the wider duty dispensation for display assemblies would help build manufacturing capabilities in automotive, medical and industrial displays, replicating India’s success in mobile phones and consumer electronics. He added that the technology-neutral exemption for capital goods used in lithium-ion cell manufacturing across segments, including EVs and battery energy storage systems, would improve competitiveness and accelerate investments in domestic manufacturing.
The changes are expected to benefit battery gigafactories, EV manufacturers, consumer electronics companies, battery storage developers, renewable energy projects, telecom infrastructure providers, data centres, medical device manufacturers, drone makers and industrial automation companies, all of which increasingly depend on lithium-ion cells.
Ministry of Electronics and Information Technology Secretary S Krishnan said the notifications followed industry representations to the finance ministry and would provide a fillip to the domestic electronics industry, particularly the electronic components segment. The measures complement the government’s broader push to deepen domestic value addition under the Electronics Component Manufacturing Scheme (ECMS) and production-linked incentive (PLI) programmes.