India eyes import duty cuts on mobile phone parts, sources say

Wistron

11/01/2024 07:34

By Shivangi  Acharya and Nikunj Ohri
       NEW DELHI, Jan 11 (Reuters) - India is considering
import duty cuts on components key to producing high-end mobile
phones, two government officials said, which would potentially
be a boost for companies like Apple  AAPL.O  and the country's
exports.
    Companies in the sector have been pushing for cuts on nearly
a dozen components to reduce the cost of making smartphones in
India and level up the playing field with regional competitors
such as China and Vietnam.
    India's electronics and information technology ministry is
firming up the proposal, including the size of the duty cuts,
and hopes it can be included in the federal budget on Feb.1, one
official said. It wasn't clear how many components are included
in the ministry's proposal.
    A decision on the cuts will be taken by the finance ministry
when it finalises the budget, the two people said.
        The sources declined to be identified given the details
of the proposal, which has not been previously reported, are not
public.
    India's electronics ministry, the finance ministry and Apple
did not respond to requests for comment.
    Components such as camera parts for high-end phones feature
in the proposal, the second person said.
    Import duties on the mobile phone components, such as camera
modules and chargers, where the industry is seeking cuts,
currently range from 2.5% to 20%, according to the industry body
India Cellular and Electronics Association (ICEA).
    It says India's levies are the highest among six comparable
manufacturing nations including China, Vietnam, Mexico, and
Thailand. Unless they are lowered, India's mobile phone exports
growth could slow down, it says.
    Those exports doubled to $11.1 billion in the last fiscal
year 2022/23 compared with the year before, according to
industry figures, helped by government incentives to support
local manufacturing.
    The industry expects exports in the 2023/24 fiscal year to
rise to $15 billion.
    Mobile phone exporters in India, other than Apple, include
South Korea's Samsung  005930.KS  and China-based Xiaomi
 1810.HK .
    Apple iPhones are currently assembled in India but the tech
giant is looking to expand into iPad and AirPods production too
in part to diversify its manufacturing away from China.
    Last year, India's trade minister said Apple wanted to boost
its manufacturing in India to 25% of its global total and a
deputy minister of information technology said the company could
double or triple investments in the country, along with exports,
over the next few years.
    In the annual budget for 2023/24, Finance Minister Nirmala
Sitharaman eliminated a 2.5% customs duty on select parts of
mobile camera phones to try to increase the number of high-end
mobile phones assembled in India.
    Separately, India's trade department is seeking import duty
cuts on more than a dozen items, ranging from engineering goods
to inputs for garment production, a third government official
said.
    The department for the promotion of industry and internal
trade did not respond to a request seeking comment.

 (Additional reporting by Munsif Vengattil in Bengaluru ;
Editing by Neil Fullick)
 ((Shivangi.Acharya@thomsonreuters.com;))