Mobile industry seeks Customs duty cuts to boost exports

The Indian mobile industry is pushing for a rationalisation of Customs duty to boost exports and help make the country more competitive globally.The industry said reducing tariffs will also integrate India into global value chains, ultimately leading to a surge in exports.

The industry projects significant benefits from the proposed tariff cuts, anticipating a substantial increase in job opportunities from 1.2 million to 3 million. Moreover, the stakeholders predict a notable rise in value addition from the current 15% to an impressive 30%.

India is narrowing the gap with China and Vietnam in terms of smartphone exports. So far, in 2024, mobile exports from China and Vietnam decreased by 2.78% and 17.6%, respectively, while India’s exports surged by 40.5%. According to news reports, India absorbed about half of the decline in mobile exports from these countries.

According to The Economic Times, citing a report from the International Trade Centre, Chinese mobile phone exports dropped from $136.3 billion in 2023 to $132.5 billion in 2024. Vietnam’s exports also fell from $31.9 billion to $26.27 billion. The combined decline in exports from both countries amounted to $9.4 billion. India’s exports soared by over 40% to $15.6 billion in 2024 from $11.1 billion the previous year, marking a $4.5 billion increase.One of the industry’s key demands is the reduction of peak tariffs from 20% to 15%. This move aims to make imports more affordable and encourage domestic manufacturing, thereby fostering growth in the sector.

“Sustaining the tremendous growth in mobile phone production and exports, requires matching the competitive tariff regimes of China and Vietnam,” said Pankaj Mohindroo, Chairman of India Cellular and Electronics Association (ICEA).

“Current high tariffs increase manufacturing costs in India by 7-7.5% on the bill of materials (BoM), deterring local ecosystem development, hampering exports and adversely impacting job creation,” Mohindroo added.

Additionally, industry representatives are advocating for a reduction in tariffs on inputs of sub-assemblies from 2.5% to nil. The industry anticipates a smoother supply chain and cost-effective production processes by eliminating or minimising these tariffs.

Furthermore, the industry said the existing customs duty structure is complicated with seven slabs. It proposes reducing the number of slabs to four to streamline and simplify the system, easing compliance for businesses and enhancing transparency and efficiency in customs procedures.

Also read: Indian smartphone market sees 15% annual growth in 2024 first quarter: Report