The Union Budget 2025-26 has introduced significant reductions in basic customs duties (BCD) on essential electronic components, paving the way for more affordable smartphones and TVs. In presenting the budget, Finance Minister Nirmala Sitharaman announced measures to strengthen India's electronics manufacturing industry and make imported devices more cost-effective.

Reduction in customs duties on key components

One of the major changes in the budget is the reduction in essential customs duties on mobile phones, mobile chargers and printed circuit board assemblies (PCBAs) from 20% to 15%. This revision is expected to reduce the cost of imported smartphones, particularly high-end models like certain iPhones, which are not manufactured in India. The government had already raised this tariff to 20% in 2018 to encourage local production, but the latest cut is seen as a step towards more accessible technology.

Potential impact on retail prices

While reducing tariffs may reduce manufacturing costs, its effect on consumer prices remains uncertain. Tarun Pathak, Research Director at Counterpoint Research, suggests minimal price reductions, with only a 1-2% decline expected in smartphone prices. Lower-priced smartphones already have narrow profit margins and may see little to no price change. The government focuses on local manufacturing and workforce development

The budget not only focuses on reducing import duties but also lays emphasis on skill development programmes to strengthen the local workforce in the electronics sector. Skill upgrading initiatives enhance India's production capabilities and foster a self-reliant electronics industry.

Previous government measures to support electronics manufacturing

The government has taken similar measures in the past to support the industry. For example, in February 2023, customs duties on smartphone camera lenses were removed, leading to cost reductions for manufacturers.

Will consumers see cheaper smartphones and TVs?

Despite the reduction in tariffs, the actual impact on retail prices will depend on how manufacturers pass on the benefits. Some brands may use the cost savings to offset rising production expenses rather than reduce consumer prices. However, the move is expected to boost long-term growth in India's electronics sector by encouraging local manufacturing and increasing market competitiveness.

Reducing customs duties on key components aims to make smartphones and TVs more affordable while boosting India's electronics manufacturing sector.