Finance Minister Nirmala Sitharaman in the Union Budget 2025 announced the removal of import duties on key components used in mobile phone production. This is seen as a major step in enhancing local manufacturing and boosting the electronics sector and it is expected to benefit major players like Apple and Xiaomi and could help India solidify its position as a mobile manufacturing powerhouse.
Key impact on electronics manufacturing
India’s electronics production has seen a dramatic rise in recent years, crossing the $115 billion mark in 2024, and with this budget announcement, the sector is looking at even greater growth. Components such as printed circuit board assemblies (PCBAs), camera module parts, and USB cables, which previously faced a 2.5% import duty, will now be exempt. This is expected to reduce production costs, enabling domestic manufacturers to compete more effectively on the global stage.
The cuts will also encourage foreign companies to set up more manufacturing units in India, taking advantage of the country’s strategic position in the global supply chain.
The new tariff revision aligns with its broader vision of promoting the Make in India* initiative. According to experts, the reduction in customs duties on critical components will accelerate the localisation of mobile phone parts such as batteries, displays, and camera modules. As manufacturers switch to local sourcing of these components, India’s dependence on imports will decrease, further strengthening the domestic supply chain.
Beyond manufacturing, the budget also addressed consumer spending, which plays a crucial role in driving demand for mobile phones and electronic gadgets. The government’s decision to raise the income tax exemption limit to Rs 12 lakh will significantly increase the disposable income of salaried individuals. With more money in their pockets, consumers are expected to increase spending on consumer electronics, providing a boost to the industry.
The improved purchasing power is likely to drive greater demand for smartphones, tablets, and other digital devices, aligning perfectly with India’s push to grow its electronics sector. As Rahul Sharma, Co-founder of Micromax Informatics, pointed out, these moves will not only reduce manufacturing costs but also help make advanced technology more accessible to Indian consumers.
“…customs duty reforms—such as exemptions on LED components and a 2.5% BCD relief on smartphone imports—will lower manufacturing costs, encourage domestic production, and make advanced technology more accessible,” he said.
Industry leaders have praised the budget’s focus on both manufacturing and consumer purchasing power. A. Gururaj, Managing Director of Optiemus Electronics, expressed optimism about the tariff reductions, calling them a “positive step” that complements earlier policies aimed at boosting indigenous manufacturing. He also noted that the tax relaxation would provide a significant boost to farmers, who are increasingly adopting new technologies like drones, further driving the growth of the electronics sector.
“This budget recognizes that what we accomplish in the next five years will undoubtedly shape our trajectory towards ‘Viksit Bharat’ – a nation with zero poverty, universal access to quality education and healthcare, and 100% skilled labor with meaningful employment. We thank the ministries for their dedication to promoting this industry, which has the potential to reach $500 billion by 2030,” said Josh Foulger, President (Electronics), ZETWERK Manufacturing.
